April 15, 2014 is everyone’s 2013 tax deadline for federal income returns, as I’m sure we’re all aware. However, if you’re worried you may not make it by April 15, you can get an automatic extension for six months, pushing your deadline back to October 15. To do this, you have to file IRS Form 4868 by April 15. It’s important to remember that while the government will give you extra time to pay up, they’re not giving you a break on the taxes you owe; when you fill out the form, you’ll have to estimate the taxes you’re due and make a payment. If your estimate is too low, you may incur penalties and interest fees.
Although you can extend your deadline to file your federal income tax, there are some deadlines that are set in stone for April 15. One of these is the contribution deadline for Traditional IRAs.
As long as you’re under 70 ½ on December 31, 2013, and had a taxable income, you can contribute to your traditional IRA for last year up until April 15 of this year. The maximum contribution to your IRA is $5,500 if you’re under 50, and $6,500 if you’re over 50. If you’re married and file a joint return with your spouse, you can both make maximum contributions to your IRA.
There are stipulations for tax deductions from your IRA contributions. Even if you are qualified to contribute to a traditional IRA, you will not automatically be able to deduct your contribution from your taxes if you are covered by your employer’s retirement plan. If you are covered by your employer’s plan, you may be able to deduct your IRA contribution, but your case will have to be assessed based on your modified adjusted gross income (MAGI). As long as your 2013 MAGI is below $59,000 if you file alone, or $95,000 if you file with your spouse, you’ll be able to receive a full deduction of your contribution. If your MAGI is above those cutoffs, you will only be able to deduct a portion of your IRA contribution.
Check back with us next week to find out how Roth IRAs function before the 2013 tax deadline.