In response to the novel coronavirus, COVID-19, the federal government has extended the tax filing deadline to July 15 for the 2019 tax year.
Taxpayers can both wait to file and wait to pay their taxes until this later date instead of being required to submit their returns by April 15.
This extended deadline is good news for lots of reasons, including the fact that taxpayers don't have to scramble to submit their returns during turbulent times. But it's especially good news for retirement savers who haven't yet maxed out their IRAs.
That's because the IRS has confirmed that July 15 will also be the new deadline for making IRA contributions for the 2019 tax year.
You now have until July 15 to contribute to your IRA
Taxpayers have always had until the April tax deadline to make IRA contributions for the prior tax year. Since the deadline for IRA contributions has been extended to July 15 along with the filing deadline, this gives you an extra few months to try maxing out your account.
This may be especially beneficial for taxpayers who want to put as much money as possible into their retirement accounts but who are concerned about locking up money in investments when they may need it to cover daily expenses during a time of economic uncertainty.
How much can you contribute to an IRA for 2019?
For the 2019 tax year, there is a $6,000 aggregate contribution limit for traditional and Roth IRAs. SEP and Simple IRAs have different contribution limits. Taxpayers who are 50 or over can make an additional catch-up contribution of up to $1,000 total.
For high income taxpayers who have access to a workplace retirement plan like a 401(k), the ability to make deductible contributions to a traditional IRA begins to phase out at:
$64,000 for singles
$103,000 if you file as married filing jointly
$0 for married filing separately
You can no longer make deductible contributions once you've made
$74,000 as a single filer
$123,000 as a married joint filer
$10,000 for married filing separately
If your spouse has a workplace plan but you don't, your deduction starts phasing out at $193,000 and disappears entirely at $203,000 if you file as married filing jointly. If you're married filing separately, it begins phasing out at $0 and disappears at $10,000.
And for a Roth IRA, your eligibility to contribute at all begins phasing out at $122,000 for singles and $193,000 for married filers, and you're no longer eligible with an income of $137,000 or $203,000 respectively. That's regardless of whether you have a workplace retirement plan. For married filing separately, the phase-out again begins at $0 and you can't contribute at all once you hit $10,000 in income.
Aim to make IRA contributions for 2019 if you can
Contributing to an IRA can help you shore up your retirement savings and build a more secure future.
While you should make sure you have emergency savings during these turbulent economic times, IRA contributions should also be a top financial priority if you have the funds.
The extension of the deadline to July 15 will provide you with more time to contribute before the chance to take advantage of your 2019 deduction disappears forever.
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