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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Hall11235 on August 11, 2015, 04:51:07 PM

Title: Maxing out an IRA using Tax year or Calendar year?
Post by: Hall11235 on August 11, 2015, 04:51:07 PM

Hey folks,
When maxing out an IRA, I know that the end of allowable contributions for 2015 is April 2016. But, if I max it out by December of 2015, will my contributions in the beginning of January count for 2015 or 2016? I don't want to pay a penalty tax.

Thanks all!

Title: Re: Maxing out an IRA using Tax year or Calendar year?
Post by: Hall11235 on August 11, 2015, 04:59:45 PM

Sorry to ask but, when do you do this? At the change of the calendar year or during tax season? I have never had an IRA before and have actually only done taxes once  (just turned 22). I should've done them for the last three years but my mom refuses to let me go as a dependent (apparently you get a good tax credit for having kids?)...

Title: Re: Maxing out an IRA using Tax year or Calendar year?
Post by: Hall11235 on August 12, 2015, 06:04:08 AM

Thanks, Serpentstooth! Great Information and super helpful.

Title: Re: Maxing out an IRA using Tax year or Calendar year?
Post by: 2Birds1Stone on August 12, 2015, 06:10:49 AM

I would always put the money in for a given year as soon as possible. Time in the market > timing the market.

Title: Re: Maxing out an IRA using Tax year or Calendar year?
Post by: teen persuasion on August 12, 2015, 06:26:17 AM

Quote from: Hall11235 on August 11, 2015, 04:59:45 PM

Sorry to ask but, when do you do this? At the change of the calendar year or during tax season? I have never had an IRA before and have actually only done taxes once  (just turned 22). I should've done them for the last three years but my mom refuses to let me go as a dependent (apparently you get a good tax credit for having kids?)...

You can file a return even if you are a dependent.  I walked my kids thru filing at age 15 after they got their first jobs.  You simply cannot take your personal exemption (approximately $4k depending on tax year) IF you are not a dependent.  You do still get your standard deduction, most likely Single for you (approximately $6k depending on tax year).  Those amounts are subtracted from your income to arrive at your taxable income; other figures may adjust things, but those are the biggies.