Last Minute IRA Contributions to Reduce Income Tax

Did you think that the window of opportunity was closed for 2015 tax planning? It’s not too late! If you have not already done so, making a 2015 contribution to your retirement account is an excellent way to reduce your income tax. Contributions must be made by April 18, 2016, in order to receive a deduction on an individual’s 2015 tax return. In addition to providing an immediate tax deduction, contributing to a traditional IRA also provides a tax-deferred method to save for retirement.
The amount that can be contributed to an IRA depends on an individual’s age. Everyone can contribute up to $5,500, while individuals age 50 or older are entitled to make an additional $1,000 “catch-up contribution,” which results in a total contribution of $6,500. In addition, it’s not too early to make a contribution for 2016 and get a head start on tax-deferred retirement saving. The contribution levels for 2016 will remain at $5,500 and $6,500 (for individuals age 50 and over). Please note that the amount that can be contributed and deducted may also be affected by participation in other retirement vehicles.