Demo: Roth IRAs


SAMPLE

Confused about whether you can contribute to a Roth IRA? The IRS suggests checking these simple rules:

Income

To contribute to a Roth IRA, you must have compensation (i.e. wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than:

  • $160,000 - Married filing jointly.
  • $10,000 - Married filing separately (and you lived with your spouse at any time during the year).
  • $110,000 - Single, Head of Household, or Married filing separately (and you did not live with your spouse during the year).

Age

There is no age limitation for Roth IRA contributions. Unlike traditional IRAs, you can be any age and still qualify to contribute to a Roth IRA.

Contribution Limits

In general, if your only IRA is a Roth IRA, the maximum yearly contribution limit is the lesser of $2,000 or your taxable compensation.

The maximum contribution limit phases out if your modified adjusted gross income is within these limits:

  • $150,000 - $160,000 - Married filing jointly
  • $0- $10,000 - Married filing separately (and you lived with your spouse at any time during the year)
  • $95,000 -$110,000 - Single, Head of Household, or Married filing separately (and you did not live with your spouse)

Contributions to Spousal Roth IRA

You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.

When to Make Contributions?

Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).

For complete information and definitions of terms, get Publication 590, "Individual Retirement Arrangements." You can call 1-800-829-3676 to request a free copy of the publication.


This daily Tax Tip has been provided by the IRS

You may like these other stories...

Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...
IRS chief: New rule on the way for tax-exempt groupsIRS Commissioner John Koskinen told the USA Today on Monday that the agency will likely rewrite a proposed rule regulating the political activities of nonprofit groups to...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.