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Pay It Forward on Tax Day Comments

  • By Katie Karlson
  • March 23, 2011

Getting your returns files is one reason to look forward to tax day. But it’s a major money day for another reason—it’s the last day you can contribute to your traditional or Roth IRA.

That’s right, Uncle Sam kindly gives you until tax day to max out your IRA savings for the previous year.

If you haven’t hit your contribution limit for last year, add cash now. If you’re under 50, your traditional and Roth IRA contributions are capped at $5,000 for 2012. Over 50? The max is bumped up to $6,000.

Even better: If you’re making tax-deferred contributions to a traditional or SEP IRA, you can deduct that amount on your federal tax form.

Example: If you sock away an extra $3,000 now in your IRA, you can subtract that amount from your taxable income for last year, so you pay a little less in taxes (although, you’re taxed later, when you take the money out in retirement).

Still, it’s like saving twice.

Don’t yet have an IRA? Get the lowdown on regular vs. Roth.

And follow this simple recipe for getting started.

Tagged in: Saving, Taxes, Retirement
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