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Contribute to Your Individual Retirement Accounts (IRAs) by April 18th

March 27, 2023

Are you saving for retirement? Individual Retirement Account (IRA) contributions can be made until April 18, 2023. Don’t wait!

Attention taxpayers…the IRS is reminding those saving for retirement that they may be able to claim a deduction on their 2022 tax return for contributions to their Individual Retirement Arrangement (IRA) made through April 18, 2023. How much can you contribute? Let’s dive in here.

What is an IRA?

An individual retirement account, or IRA, is a tax-deferred retirement savings account. In a Traditional IRA, there is no taxation on contributions. Rather, you pay income tax when taking withdrawals. Traditional IRA contributions may be deductible or non-deductible, depending on your income, tax-filing status and whether you have access to a retirement plan where you are employed (regardless if you participate in the plan or not).

A Roth IRA is a special individual retirement account that you fund with post-tax dollars. In other words, you are satisfying the tax liability upfront, enabling the earnings to appreciate and be withdrawn tax-free. However, you cannot also deduct Roth IRA contributions on your Form 1040, as this would duplicate the benefit. Earnings on the account and withdrawals after age 59½ are accessible income tax-free as long as the account has been in existence for five years.

What is the contribution deadline?

For 2022, contributions can be made to a traditional or Roth IRA until the filing due date, April 18th. April 15th falls on a Saturday this year; when the deadline falls on a weekend, the IRS moves the deadline to the next business day. However, that Monday, April 17th, 2023, is Emancipation Day, a holiday recognized in Washington, D.C., where the IRS is headquartered.

How much can you contribute?

Eligible taxpayers can typically contribute up to $6,000 for 2022 (goes up to $6,500 for tax year 2023). If you reached age 50 or older by the end of 2022, you can contribute $7,000 (goes up to $7,500 for tax year 2023).

How much is the deduction?

Contributions to one or more traditional IRAs may be deductible up to the contribution limit or 100% of the taxpayer's compensation (whatever is less).

Questions? Contact us.

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