10 Quick Tips for Making Your 2015 IRA Contribution

By Sarah Brenner, IRA Analyst
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We are down to the wire! The tax-filing deadline is rapidly approaching and time is running out to make your 2015 IRA contribution. In the final few days, before the clock runs out, here are 10 quick last minute tips to keep in mind about contributing to an IRA.

1. For most taxpayers, the deadline for making your 2015 IRA contribution is April 18, 2016. An extension to file your federal income taxes does not give you more time to make an IRA contribution, so get your contribution in on time.
    
2. A 2015 contribution that is mailed with an April 18, 2016 postmark will be considered on time even if it is received by the custodian after the deadline.
    
3. Don’t forget to designate your 2015 contribution as a prior-year contribution. If you don’t, the custodian may count it for the current year (2016) instead. This may cause a tax problem for you.
    
4. The most you may contribute for 2015 to all of your traditional and Roth IRAs combined is $5,500 ($6,500 if you are age 50 or over in 2015).
    
5. Don’t forget to take a deduction for your traditional IRA on your tax return and/or file Form 8606 with your return if all or a portion of your contribution is not deductible. No need to worry about Roth IRA contributions. They are not reported on your return, though you should keep track of them.
    
6. Compensation is required to make an IRA contribution. For many people this means a salary or self-employment income. If you are married you can use your spouse’s taxable compensation to make a spousal contribution to your IRA.
    
7. Be sure that you’re eligible. Remember that you cannot make a traditional IRA contribution for the year you attain age 70 ½ or for any year after. There is no age limit for making Roth IRA contributions but your income must be below certain levels.
    
8. Your IRA contribution must be made in cash. You may not make a contribution of property, such as stock, to your IRA.
    
9. Participation in an employer plan at work does not mean that you can’t contribute to an IRA. That has no impact on your eligibility to contribute to either a traditional or Roth IRA. It’s one of five common myths that keep people from making a contribution. Your ability to deduct your contribution may be limited if your income is too high.
    
10. The Savers Credit is a non-refundable tax credit available to taxpayers with relatively modest income. You can take advantage of this credit if you are eligible and still deduct your traditional IRA distribution too.

Have questions about your 2015 IRA contribution? A financial advisor with IRA expertise can help. It’s not too late, but time is in short supply. You only have a few days left before the deadline. If you miss it, you will lose your chance to make your IRA contribution for the year. To be safe, make your 2015 contribution sooner rather than later.