The IRS has 8
important tips for you about setting aside money for your retirement in an
Individual Retirement Arrangement.
1. You must be
under age 70 1/2 at the end of the tax year in order to contribute to a
traditional IRA.
2. You must have
taxable compensation to contribute to an IRA.
·
If
you file a joint return, generally only one spouse needs to have taxable
compensation.
3. You can
contribute to your traditional IRA at any time during the year.
4. For 2013, the
most you can contribute to your IRA is the smaller of either your taxable
compensation for the year or $5,500. If you were 50 or older at the end of 2013
the maximum amount increases to $6,500.
5. Generally,
you will not pay income tax on the funds in your traditional IRA until you
begin taking distributions from it.
6. You may be
able to deduct some or all of your contributions to your traditional IRA.
7. You may also
qualify for the Savers Credit, formally known as the Retirement Savings
Contributions Credit. The credit can reduce your taxes up to $1,000 (up to
$2,000 if filing jointly). Use Form 8880, Credit for Qualified Retirement
Savings Contributions, to claim the Saver’s Credit.
8. You must file
either Form 1040A or Form 1040 to deduct your IRA contribution or to claim the
Saver’s Credit.
from IRS Tax Tip 2013-50:
