As tax season approaches, individuals are presented with a unique opportunity to optimize their financial portfolios through strategic IRA contributions, also known as your Individual Retirement Account.
At LPSC Financial, we understand how important it is for workers to plan for the future, and contributing to your IRA can have substantial benefits. Many people might now be aware of the benefits their contributions can have leading up to tax time.
Let’s delve into the importance of making IRA contributions and how you can make the most of this financial opportunity.
Deadline Reminder: April 17, 2024
One key advantage taxpayers have during tax season is the ability to contribute to their IRAs for the previous tax year up until the tax deadline. For the tax year 2023, the contribution limit is $6,500. If you are filing for the 2023 tax year, you have until April 15, 2024, to make your contribution. This extended timeframe provides a valuable window for individuals to assess their financial situation and make strategic decisions when saving for retirement.
Looking ahead, the new tax year brings an increased contribution limit. Starting from January 1, 2024, individuals can contribute up to $7,000 towards their 2024 tax year limit. This adjustment allows investors to proactively plan for the upcoming tax year and take advantage of the higher contribution ceiling. Those limits will get even higher in 2024 — $7000 for workers under 50 and $8,500 for workers 50 or older.
Understanding the Benefits
Last-minute contributions to your IRA can save you on your tax bill. For example, individuals within the 24% tax bracket could take up to $1,560 off their tax bill with a $6,500 contribution to their IRA. Since you have until tax day to make these contributions, it is entirely possible to make those contributions in time to receive the benefit.
If you are just starting on your taxes, LPSC Financial has a large list of financial calculators available to review, including IRA contributions.
If you have any questions regarding tax strategy, please don't hesitate to contact your advisor.