How your IRA contributions will affect your taxes
Our tax experts are answering Yahoo Finance viewer questions as we hit the homestretch for tax day — April 15, 2019.
It can be confusing to figure out how your taxes might affect your retirement accounts, and vice versa. Donna Cuiffo, tax partner at Clarfeld Financial Advisors, explains the guidelines for IRA (individual retirement account) contributions around tax season, and the last-minute tweaks you can make on your return right up until tax day.
Last-minute deductions
Cuiffo says the most common last-minute deduction for your taxes is an IRA contribution. The contribution limit, which went up to $6,000 in 2019, can be deposited into your IRA account up until April 15. “The IRA is probably the most common [deduction] that you can make post-calendar year,” Cuiffo says, but whether you put money into your IRA during the calendar year for which you’re paying taxes, or post-calendar year between Jan. 1 and April 15, double-check to make sure these contributions are tagged to the correct year. “You do have to make sure that when you are making a donation to an IRA that you tell the IRS which year you are doing it for,” Cuiffo explains.
The other way to make sure you have everything together last-minute is to check that your return is picking up all the cash deductions you’ve already paid throughout the year.
IRA contributions causing an audit
A Yahoo Finance viewer asked if contributing to their IRA account could trigger an audit, but Cuiffo says that “one has nothing to do with the other.” She adds that “an audit is because you're picked out of a group, it's random. There are certain things that might make you more susceptible to the audit pool, but donating to an IRA is not one of them.”
If you have tax questions, send them to us at moneyquestions@yahoo.com.
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