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Answer:
Dear
T. Wilson,
A
good question to ask any time but especially toward
the end of the year.
Individual
Retirement Accounts
You
can contribute up to $3,000 to an IRA this year. If
you are age 50 or older, the maximum amount is $3,500.
Note:
Those dollar amounts increase in the year 2005
to $4,000 and $4,500 respectively.
Caution:
Keep in mind that contributions you make to the
newer Roth IRA are never tax deductible.
Contributions
to the older, traditional IRA are deductible in certain
situations. Those three situations are:
(1)
If you are not covered by an employer-sponsored
retirement plan.
(2)
If your income is under a certain amount, even if
you are covered by an employer-sponsored plan.
Single
filers must have incomes of less than $45,000 in 2004
to take the full IRA deduction. Smaller deductions
are available for single filers with incomes up to
$55,000.
If
you're filing a joint return, the income limits are
$65,000 and $75,000, respectively.
(3)
If you file a joint return and your income is under
$150,000 and only one of you works.
Then
the non-working spouse can take this deduction even
if the working spouse is covered by an employee-sponsored
retirement plan.
$Tip:
Because you have your IRA with BUYandHOLD, you will
be receiving your year-end monthly statement in January
and Form 1099R, if you had a distribution during that
tax year in February. If you have any questions regarding
this information, contact one of our Customer Service
Representatives.
For
Further Information:
The
IRS continually posts information about IRAs and has
a brochure on the topic at: www.irs.gov.
Other
Common Tax Deductions
Although
you asked only about IRAs, I want you to keep the
following 10 possible deductions in mind. Each comes
with typical IRS stipulations and restrictions, but
don't overlook any of them as possibilities. Your
tax preparer can also help determine if you qualify
for any or all of them.
In
alphabetical order:
Alimony
(paid, not received)
Charitable contributions
Early bank CD withdrawal penalties
Health Savings Accounts (HSAs)
Higher education costs (tuition & some fees)
Hybrid cars
Mortgage interest
Moving expenses (if for business purposes)
Self-employed retirement plans (SEP, SIMPLE, Keogh)
Student loan interest
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