Taxes and Individual Retirement Accounts
There are specific rules that allow an investor to deduct their IRA contributions. These IRA contribution rules are fairly straightforward and typically do not vary much.
This year, the IRS began accepting electronically filed tax returns on January 17, 2012.
For taxpayers waiting until the last day to file without an extension, the Internal Revenue Service has again moved the deadline from the traditional 15th of April. This year it is Tuesday, April 17, 2012. The reason for this is the 15th is a Sunday (no postal mail service) and Monday, April 16th, is a holiday observed in the District of Columbia (Emancipation Day). During any year that this date falls on the same day taxes would be typically due, then tax day is moved forward, as District of Columbia holidays are treated like federal holidays.
This makes April 17 the last day to make a retroactive contribution to various IRAs, including a traditional IRA, Roth IRA, Health Savings Account, SEP-IRA or a solo 401(k) account.
However, there are exceptions to this, as outlined below.
Late Filings and Deadlines
Taxpayers who are trying to determine the latest date to make IRA contribution should be aware of of the following:
- Those who file for an extension will be allowed to take until October 15, 2012 to file their taxes. However, this does not give them an extension on their IRA contribution, unless they are filing an SEP-IRA or a solo 401(k). Otherwise, IRA contribution rules state that the deposit to an IRA must be made on the date that the taxes are due (in this case, April 17, 2012);
- To claim a tax deduction for your 2011 IRA contribution, it is the postmark that determines the date of the IRA contribution. Those who are interested in making an IRA contribution on the last possible date may have the deposit mailed as late as midnight on April 17, 2012 for most, or October 15, 2012, for those who have a solo 401(k) or an SEP-IRA . Note for the latter, it’s always best to check with the agency handling your account, as there could be additional processing time required;
- Extensions for members of the armed forces are impacted by whether or not you are serving in a combat zone. If you are not serving in a combat zone, or just outside a combat zone in a support unit, then the normal IRA extension rules apply. If you are serving in or near a combat zone, then there are specific extension rules that may apply. For more information, please visit the Extension of Deadlines – Combat Zone FAQ on the IRS website at https://www.irs.gov/newsroom/article/0,,id=101265,00.html;
- When making an IRA deposit after January 1, 2012 it is critical that the taxpayer make a notation on the check they are submitting. This will help prove they intended the deposit for the 2011 tax year;
- All contribution maximums must be observed. Any excess deposits may be moved to the current tax year (e.g., 2012).
Internal Revenue Service
- IRS Kicks off 2012 Tax Season: IR-2012-1, Jan. 4, 2012 https://www.irs.gov/newsroom/article/0,,id=251825,00.html
- Extension of Deadlines — Combat Zone Service https://www.irs.gov/newsroom/article/0,,id=101265,00.html
- Perez, William, Income Tax Deadlines: Critical IRS Deadlines in the Year 2012 https://taxes.about.com/od/Federal-Income-Taxes/qt/tax-deadlines.htm