Author Topic: IRA maxed out, anywhere else to go before April 1st?  (Read 1475 times)

gatorNic

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IRA maxed out, anywhere else to go before April 1st?
« on: January 26, 2015, 11:42:45 PM »
Been a busy year.  Wife and I changed jobs, she worked a couple contract 1099's before getting something permanent (so no 401k), had a little bit of unemployment (which I forgot about), I got a bonus I wasn't expecting.  Needless to say I made a mistake this year and forgot/miscalculated some things so now I think we are going to be stuck in a higher bracket.  Facepunch!

Basically not enough into 401k, not enough itemized deductions.  I think we are over by 17K.  She has a IRA available to contribute to.  17K-5.5k = 12K  I don't have an IRA, so the first question is can still open one this year and contribute to last year?  If so then 12K-5.5K=6.5K, so we're still over by 6.5K. 

Is there any other way to get last years AGI down after the 1st of the year like with the contributing to IRA's until April 1st?  Or are we screwed?  I have a feeling its the latter.  I guess there is no way to backdoor a 401k, because that can only come from your check?

Its not the end of the world I do understand that only the amount above the tax bracket will be taxed at the higher amount, but I am still quite interested in my questions.  Thanks
« Last Edit: January 27, 2015, 12:20:03 AM by gatorNic »

MDM

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Re: IRA maxed out, anywhere else to go before April 1st?
« Reply #1 on: January 27, 2015, 01:07:22 AM »
I don't have an IRA, so the first question is can still open one this year and contribute to last year?
Yes, doing it before you file your tax return is the easiest.  Most brokerages will ask, when you contribute to an IRA between 1/1 and 4/15, if it is for "this year" or "last year."

Quote
Is there any other way to get last years AGI down after the 1st of the year like with the contributing to IRA's until April 1st?  Or are we screwed?  I have a feeling its the latter.  I guess there is no way to backdoor a 401k, because that can only come from your check?
Yes, the clock on a 401k resets on 1/1.

Just checking - it is your taxable income, not AGI, that determines the marginal tax bracket.  Have you already subtracted the deduction and exemption amounts?  I'm guessing yes because you mention itemized deductions in the OP but just in case....

SaintM

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Re: IRA maxed out, anywhere else to go before April 1st?
« Reply #2 on: January 27, 2015, 05:15:56 AM »
Sometimes you just need to be thankful for the extra income, pay the tax, and plan for the next year. Only only pay an effective tax rate of about 5%, but I still tell myself to be thankful. It helps a little as I write the $7k check to the treasury.

gatorNic

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Re: IRA maxed out, anywhere else to go before April 1st?
« Reply #3 on: January 27, 2015, 11:18:38 AM »
Sometimes you just need to be thankful for the extra income, pay the tax, and plan for the next year. Only only pay an effective tax rate of about 5%, but I still tell myself to be thankful. It helps a little as I write the $7k check to the treasury.

Yeah agreed.  It is probably not big enough to lose sleep about.  If I calculated it right.  17K over * the extra 3% (25% to 28% bracket difference) = $510 difference.  So its not like our entire income is being taxed at 28%, which is where it looks scary. 

Good to know you can open a IRA after the fact.  I was going to open one anyway