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Answer:
Dear
Ralph,
I
certainly hope you can, but its deductibility depends
upon several IRS rulings.
Paying
On Time
First,
I want to point out that you have until April 15,
2005 to make your IRA contribution for 2004 and then
take a deduction on your 2004 return.
Second,
if you apply for an extension, your 2004 contribution
still must be made by April 15th. In other words,
the extension does not apply to your funding your
IRA.
Six
Points
Here
are 6 additional things you need to know...
(1)
The maximum contribution for 2004 is $3,000.
(2)
However, the maximum is $3,000 plus $500
if you are age 50 or older.
(3)
You can also deduct another $3,000 for your spouse
for a total IRA deduction of $6,000 (plus $500 if
she is 50+), if she is not employed.
(4)
All you are required to have is enough earned income
(wages, not investment or dividend income) to cover
the total amount of IRA contribution that you will
be making.
$Tip:
If you have less than $3,000 of earned income,
you may contribute up to 100% of your earned income.
If you're 50 or older, you can contribute the additional
$500, provided you have at least $3,500 of earned
income.
(5)
Not everyone qualifies for the tax deduction.
The IRS has several very specific requirements. You
qualify if you are not covered by an employer
plan, such as a 401(k) or 403(b).
If
you are covered by an employer plan, then your Adjusted
Gross Income (AGI) for 2004 must have been under $75,000
if you are married.If
you are single, then your AGI for 2004 must have been
less than $55,000.
$Tip:
If you are not certain whether you (or your spouse)
is covered by a qualified pension plan at work,
check out Box 13 or your W-2. If you do have such
a plan, the "Retirement Plan" box will be checked.
(6)
Even if you do not meet the above qualifications,
you can (and probably should) contribute to a non-deductible
IRA.
A
final bit of advice, the earlier in the year you fund
your IRA with BUYandHOLD, the longer it will have
to grow. And, the good news is that next year the
amount you can contribute goes up to $4,000.
If
you need more information, you can contact our Customer
Service Department by calling 800-646-8212.
The
definitive answers, of course, are all found at: www.irs.gov.
Good
Luck!
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