Author Topic: Can I use a state tax refund to qualify for a Roth IRA contribution?  (Read 311 times)

Comenius

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I got a state tax refund this year of $7,100 which I understand will be taxed as federal income. I FI/RE'd late last year and will have very little other income this year other than a few thousand dollars in interest and dividends. I itemized my deductions last year but may not reach the threshold to do so this year. Can I contribute to my Roth IRA?

Also, I'm currently 49 and will be turning 50 in March of 2018. If I'm eligible to contribute, is the maximum amount $5,500 or $6,500?

Thanks!

ixtap

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Re: Can I use a state tax refund to qualify for a Roth IRA contribution?
« Reply #1 on: July 29, 2017, 08:27:06 AM »
The Roth IRA requires earned income; if you don't have to pay FICA and SS, you can't contribute.

If you do have earned income, you can contribute up to the earned amount. If you forgot to mention a spouse, you can contribute based on their earned income.

The catch up contributions are based on your age during the calendar year that the contribution is credited to, even if you wait until you do your taxes to actually make the contribution.

Comenius

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Re: Can I use a state tax refund to qualify for a Roth IRA contribution?
« Reply #2 on: July 29, 2017, 02:45:54 PM »
Got it, that's super helpful, thank you!

Drifterrider

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Re: Can I use a state tax refund to qualify for a Roth IRA contribution?
« Reply #3 on: August 02, 2017, 05:46:53 AM »
I got a state tax refund this year of $7,100 which I understand will be taxed as federal income. I FI/RE'd late last year and will have very little other income this year other than a few thousand dollars in interest and dividends. I itemized my deductions last year but may not reach the threshold to do so this year. Can I contribute to my Roth IRA?

Also, I'm currently 49 and will be turning 50 in March of 2018. If I'm eligible to contribute, is the maximum amount $5,500 or $6,500?

Thanks!

That depends.  If you itemized, you already deducted too much (your refund amount) and now you are just "balancing the books" so yes, you will pay taxes on it next year, instead of this year.

If you did not itemize, you will not claim it next year.