One of life’s great conundrums is the passage of time and the inability to change the past. Countless plots and storylines revolve around the idea of going back in time to alter the course of the future. Yet, we all know that time travel is impossible, at least in the physical realm.
However, in the financial realm it actually is possible to amend history. One notable opportunity is the ability to reduce last year’s taxable income by making “prior year” contributions to your IRA. It’s not exactly like going through a wormhole or teleporting through the millennia, but it is a sound practice that one should consider.
Remember, most opportunities to adjust your income end on 12/31 of that year, but Traditional IRA contributions made before April 15, 2024, still reduce your taxable income for 2023. It’s a financial time travel move that makes good sense for many.
Here are a couple points to keep in mind. It is important to know that filing an extension does not extend the tax deadline. Also, you must be eligible to make a deductible IRA contribution, as the income and contribution limits for 2023 still apply.
Self-employed taxpayers enjoy more flexibility when they utilize SEP-IRAs for their retirement savings. Not only are contribution limits potentially higher, filing an extension does also extend the deadline for tax-deductible SEP-IRA contributions.
This deadline extension gives a self-employed taxpayer all the way to October 15th to adjust last year’s taxable income. Please note that the deadline for a self-employed taxpayer contributing to a Traditional or Roth IRA remains April 15th.
We wish you a pleasant journey on your travels and offer you an important piece of advice for the journey ahead — be sure to consult with a Nepsis® tax adviser about your specific situation.
Enjoy your journey on the road to ultimate Clarity – the Road to Nepsis®.
https://www.irs.gov/newsroom/tax-time-guide-2024-what-to-know-before-completing-a-tax-return https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep
Advisory Services offered through Nepsis, Inc., An SEC Registered Investment Advisor.