As the April 15th income tax filing deadline approaches, the Internal Revenue Service is offering some last-minute tips for taxpayers, including helpful advice on how contributions to your Individual Retirement Arrangement (IRA) can affect your tax situation. Take a look at a few highlights from the top 10 below:
Tip #1. You may be able to deduct some or all of your contributions to your IRA and you also may be eligible for a tax credit equal to a percentage of your contribution.
Tip #2. Contributions can be made to your traditional IRA at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means contributions for 2008 must be made by April 15, 2009.
Tip #5. For 2008, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,000 or the amount of your taxable compensation for the year. Taxpayers who are 50 or older can contribute up to $6,000.
Tip #8. To contribute to a traditional IRA, you must be under age 70 1/2 at the end of the tax year.
Learn more: Top Ten Tips for IRA Contributions, from the IRS