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ElectroFile Income Tax Service Newsletters
Income Tax Service
5200 W Market St
Greensboro, NC 27409
December 18, 2015
Top Year-End IRA Reminders
Individual Retirement Accounts, or IRAs, are important vehicles for you
to save for retirement. If you have an IRA or plan to start one soon,
there are a few key year-end rules that you should know. Here are the top
year-end IRA reminders from your tax preparers at ElectroFile Income Tax Service.
Know the contribution and deduction limits.
up to a maximum of $5,500 ($6,500 if you are age 50 or older) to a
traditional or Roth IRA. If you file a joint return, you and your
can each contribute to an IRA even if only one of you has taxable
compensation. You have until April 18, 2016, to make an IRA
for 2015. In some cases, you may need to
reduce your deduction
for your traditional IRA contributions. This rule applies if you or your spouse has a
retirement plan at work
and your income is above a certain level.
Avoid excess contributions.
If you contribute more than the
IRA limits for 2015, you are subject to a six percent tax on the excess amount. The tax applies
each year that the excess amounts remain in your account. You can avoid the tax
if you withdraw the excess amounts from your account by the due date of your
2015 tax return (including extensions).
Take required distributions.
If youíre at least age 70Ĺ, you must take a
required minimum distribution, or RMD, from your traditional IRA. You are not required to take a RMD from
your Roth IRA. You normally must take your RMD by Dec. 31, 2015. That deadline
is April 1, 2016, if you turned 70Ĺ in 2015. If you have more than one
traditional IRA, you figure the RMD separately for each IRA. However, you can
withdraw the total amount from one or more of them. If you donít take your RMD
on time you face a 50 percent excise tax on the RMD amount you failed to take
IRA distributions may affect your premium tax credit.
If you take a distribution from your IRA at the end of the year and expect to
claim the PTC, you should exercise caution regarding the amount of the
distribution. Taxable distributions increase your household income, which
can make you ineligible for the PTC. You will become ineligible if the
increase causes your household income for the year to be above 400 percent of
the Federal poverty line for your family size. In this circumstance, you must
repay the entire amount of any advance payments of the premium tax credit that
were made to your health insurance provider on your behalf.
Each and every taxpayer has a set of fundamental rights they should be aware of
when dealing with the IRS. These are your
Taxpayer Bill of Rights
. Explore your rights and the IRS' obligations to protect them on IRS.gov.
Additional IRS Resources:
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