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March marks the start of spring and the middle of the tax filing season. If you still need to file, then you may have the opportunity to contribute for last year as well as this year.
According to IRS Publication 590, you can contribute to the prior year up until the tax filing deadline and you can also contribute for the current year. Your current year IRA contribution is something to consider when deciding what to do with any tax refunds you receive.
While it seems like IRA contributions are the simplest aspect of managing your self-directed IRA, there are still things you need to know about them to avoid IRS penalties.
It is important to remember Roth IRAs have income qualifications, while Traditional IRAs do not. When it comes to contributions, a unifying factor is you need to have earned income. The exception to these rules is a spousal IRA contribution.
This detail was put in place for someone who receives minimal or no compensation. Their spouse may contribute on their behalf, provided the couple files jointly on their return and meets other qualifications.
Good Recordkeeping Matters
Factors, such as the details above, are why it is crucial for Equity Trust clients to use deposit coupons to differentiate what incoming funds represent.
Equity Trust receives funds for a variety of reasons: proceeds of a sale, investment income such as a loan or rent payments, rollovers, transfers, and personal contributions.