Tax season is upon us. The wonderful time of year where I start running around in a sleep-deprived, frantic hysteria singing ‘It’s the most wonderful time of the year!’ Focusing on preparing client’s w2’s, 1099’s and beginning to prepare tax returns. The time flies by and the amounts of things I forget to do personally becomes longer and longer every passing hour. Two things that I have forgotten about completely are suddenly brought back into my focus. The first, buy mouse traps. Seems innocent enough, but the snapchat message I got from my wife a few minutes ago brought it back to my #1 priority for the day. The second, retirement savings. A call from a client wondering if it was too late to fund his retirement for 2017 reminded me that I too, have yet to do this. Luckily for both of us, there is still time.
There are retirement options that need to be done by year-end. These consist of the salary deferral type accounts, such as a 401k or a Simple IRA. For these, it is too late, but for the retirement options such as a Traditional IRA, a ROTH IRA, or a SEP IRA you have until your return is filed for contributions for the 2017 tax year. I don’t pretend to be a financial advisor but I would like to discuss the tax implications of these options now. For the purposes of this article, I am basing everything off the tax code in play for the 2017 tax year.
The Traditional IRA allows you and your spouse to put away up to $5,500 a year as long as you meet some earned income and other criteria. This allows you up to an $11,000 deduction from your taxable income for 2017. If you are over 50, there are catch-up