07 Jan Client Bulletin Jan 2019
Smart tax, business and planning ideas from your Trusted Business Advisor SM January 2019
In this issue
1 Double (and triple) IRA season is here
2 Drive cautiously… but carry ample auto insurance
3 IRS says business meal deductions still apply
4 Tax calendar
Double (and triple) IRA season is here
The start of each year might be considered “Double IRA” season. Until mid-April (the 15th, in 2019), you still can make contributions to an IRA for 2018, if you have funds you’d like to save for retirement.Most workers and their spouses may each contribute up to $5,500, or $6,500 for those who were 50 or older at the end of 2018.
If you have additional dollars to invest, you also can put them into an IRA for 2019, now that the year has begun. The sooner you put money into a 2019 IRA and choose investments, the sooner tax-advantaged buildup might begin.
Note that such IRA contributions are permitted even if you also participate in an employer’s retirement plan. The same is true if you participate in a SEP-IRA or SIMPLE IRA through your company or self employment.
Three for the money
Many workers can choose among three types of IRAs.
Deductible IRAs. Whereas most workers and their spouses can contribute to regular (traditional) IRAs, only some people can deduct their contributions. A full deduction is available if you do not participate in an employer’s retirement plan; if you do participate, the deduction allowed depends on your income.
Example 1: Paula Adams, a single taxpayer who participates in a 401(k), must have had modified adjusted gross income (MAGI) of $63,000 or less in 2018 for a full deduction on her 2018 tax return. If her MAGI is greater than $63,000 but less than $73,000, a partial deduction is allowed.
Different MAGI numbers apply to married taxpayers filing joint returns, qualifying widows or widowers, and married taxpayers filing separate returns. Contributions to traditional IRAs are not
allowed after you reach age 70½.
Roth IRAs. Contributions to Roth IRAs are never tax deductible. However, once you have had a Roth IRA account for five years and reach age 59½, all withdrawals ― including withdrawn investment earnings ― are untaxed.
There are no age limits for contributions to a
Roth IRA. However, income limits apply.