|
Even
though 2003 has come and gone, there is still an opportunity to get
deductions for 2003, but you better hurry.
Here are some ways to benefit for 2003.
IRA
contributions
The
IRS gives you until April 15 to make an IRA contribution for the previous
year. For 2003 the maximum
contribution to an IRA is $3,000. For
people who are at least 50 by the end of 2003 can contribute an additional
$500 as a “catch up” contribution. There
are income limits and limitations based on participation in your employer
provided retirement plan.
These
limits also apply to Roth IRA’s, but the contribution is not deductible.
Instead, the Roth IRA grows tax free and the distributions upon
retirement are not taxable.
A
credit can be claimed for contributions to IRA accounts.
However, the taxpayer must be at least 18 at the end of the year,
must not be claimed as a dependent by someone else and must not be a
student. There are phase-outs
relating to adjusted gross income to claim the credit.
Simplified
Employee Pensions (SEP’s)
Employers
who have SEP’s can make contributions up to the due date of their tax
return (including extensions) and receive a deduction for 2003.
For 2003, the employer contribution is limited to the lesser of 1)
25% of employee compensation (maximum of $200,000) or 2) $40,000.
SIMPLE
IRA’s
The
same timing of 2003 deductions that apply to SEP’s apply to SIMPLE
IRA’s, the due date, including extensions, of the employer’s tax return.
Employer’s can match employee contributions dollar-for-dollar, up
to 3% of the employee’s compensation.
|
