Roth IRA and contribution deadline question

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JohnnyBeGood
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Roth IRA and contribution deadline question

Post by JohnnyBeGood » Tue Feb 13, 2018 1:07 pm

Hello,

So I have about $2,800 left to contribute before the deadline 04/17/2018 and I want to deposit allowed limit before the deadline.
My question, if I wanted to do my taxes say today can I do it and enter that I will deposit allowed limit of $5,500 or I have to deposit first, let deposit clear and then do the taxes? How that works?

Thanks!
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tarmangani
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Re: Roth IRA and contribution deadline question

Post by tarmangani » Tue Feb 13, 2018 1:27 pm

You don't report your Roth IRA contributions on your taxes (it's after-tax money, so the IRS doesn't care about it). As far as I know, you can contribute to a Roth any time up to the deadline, regardless of whether you've filed. Someone please correct me if I'm wrong.

DSInvestor
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Re: Roth IRA and contribution deadline question

Post by DSInvestor » Tue Feb 13, 2018 1:31 pm

While Roth IRA contributions are not visible on your tax return, tax software may track your contributions to track Roth IRA contribution and/or conversion basis. I vaguely remember Turbotax doing this. The IRA contribution whether Roth or Traditional may allow the taxpayer to claim retirement savers tax credit.

The safest way is to prepare the tax return with total Roth IRA contribution to verify that it is allowed for your income and calculate the tax. Note that retirement savers tax credit could affect final tax liability. Make the contribution to match the return and then file the tax return. If you file return before the contribution, something may come up and you might not actually make the contribution. You don't want to have a situation where you get a tax credit for a $5500 contribution and only end up with contributing $3000. The important thing is that the IRA contribution matches what you entered into your tax software/tax return, regardless of what order you did things.

Make sure you designate the correct tax year for any IRA contributions that you make between JAN 01 - APRIL 17, 2018 as you can contribute for 2017 and/or 2018 tax years in this period.
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Earl Lemongrab
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Re: Roth IRA and contribution deadline question

Post by Earl Lemongrab » Tue Feb 13, 2018 4:21 pm

DSInvestor wrote:
Tue Feb 13, 2018 1:31 pm
While Roth IRA contributions are not visible on your tax return, tax software may track your contributions to track Roth IRA contribution and/or conversion basis.
The software also cross-checks to make sure you're making eligible contributions.
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JohnnyBeGood
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Re: Roth IRA and contribution deadline question

Post by JohnnyBeGood » Tue Feb 13, 2018 4:23 pm

Thanks you all for the replies!
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Spirit Rider
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Re: Roth IRA and contribution deadline question

Post by Spirit Rider » Tue Feb 13, 2018 10:39 pm

The tax software also tracks your IRA contributions including a Roth IRA for the Saver's Credit.

To answer your basic question. Your tax return and your (traditional/Roth IRA contribution deadlines are the same date, but the actual dates are independent.

So even in the case of a traditional IRA, you could claim a $5,500 contribution and file on 02/17 and actually make the contribution on 4/17 (I wouldn't cut it that close). Of course if you didn't make that contribution, you would have to amend your return.

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JohnnyBeGood
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Re: Roth IRA and contribution deadline question

Post by JohnnyBeGood » Wed Feb 14, 2018 12:56 pm

Thanks! So far it looks like the best option is to make entire contribution now and then do the taxes to avoid any confusions.
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Alan S.
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Re: Roth IRA and contribution deadline question

Post by Alan S. » Wed Feb 14, 2018 1:21 pm

Yes, do that if you can.

This is probably a good time to comment on direct IRA contributions of tax refunds using this form: https://www.irs.gov/pub/irs-pdf/f8888.pdf

As you can see from reading the form, what could possibly go wrong? Almost anything. So if someone suggests this my advice would be to avoid it unless you want to take the risk of digging out of a real mess.

Also, IRA custodians usually use the "postmark rule" for determining the cutoff time for contributions. Under this rule, a contribution is considered made by the deadline if it is postmarked by the deadline ( many POs open till midnight on tax deadline day). However, it is also possible for a custodian to use an earlier cutoff.

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JohnnyBeGood
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Re: Roth IRA and contribution deadline question

Post by JohnnyBeGood » Thu Feb 15, 2018 12:35 pm

Thanks for the info!
I like to fill my tub up with water then turn the shower on and act like I'm in a submarine that's been hit.

ericericeric
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Re: Roth IRA and contribution deadline question

Post by ericericeric » Sun Mar 04, 2018 8:35 pm

I'd like to piggyback off of this question (been following the forums for a couple weeks now, this is my first engagement). Let's say I contribute the entire $5500 today for the 2017 Roth IRA deadline. Tomorrow can I begin my contributions for 2018, or should I wait until after 4/15?

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JohnnyBeGood
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Re: Roth IRA and contribution deadline question

Post by JohnnyBeGood » Sun Mar 04, 2018 9:00 pm

With Vanguard when I looked in transaction history my automatic contributions were set twice every month and last one in December went in 2017 and next one in January went into 2018 account. So to answer your question tomorrows contribution would in 2018 year.
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sport
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Re: Roth IRA and contribution deadline question

Post by sport » Sun Mar 04, 2018 9:12 pm

ericericeric wrote:
Sun Mar 04, 2018 8:35 pm
I'd like to piggyback off of this question (been following the forums for a couple weeks now, this is my first engagement). Let's say I contribute the entire $5500 today for the 2017 Roth IRA deadline. Tomorrow can I begin my contributions for 2018, or should I wait until after 4/15?
Welcome to the forum. You do not have to wait.

TG2
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Re: Roth IRA and contribution deadline question

Post by TG2 » Sun Mar 04, 2018 9:19 pm

ericericeric wrote:
Sun Mar 04, 2018 8:35 pm
I'd like to piggyback off of this question (been following the forums for a couple weeks now, this is my first engagement). Let's say I contribute the entire $5500 today for the 2017 Roth IRA deadline. Tomorrow can I begin my contributions for 2018, or should I wait until after 4/15?
Whenever you want. As stated, the deadline for an IRA contribution is the due date of the return. That gives you fifteen and a half months (January 1 through mid-April the next year depending on tax deadline) to make your contribution. In fact, if you somehow messed up and did not specify your contribution for 2017, you could actually leave it and then do 2017 after 2018 if you had to.

I generally made my Roth contribution at the start of each year. A couple of years ago, I wasn't sure if I would keep working so never bothered to make it. In January, I went up and did a $13,000 contribution at one time. $6500 for both the preceding and the current years. No problem.

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