IR-2020-146, July 9, 2020
WASHINGTON — The Internal Revenue Service today reminded people that contributions to traditional Individual Retirement Arrangements (IRAs) made by the postponed tax return due date of July 15, 2020, are deductible on a 2019 tax return.
Taxpayers can file their 2019 tax return now and claim the deduction before the contribution is actually made. But the contribution must then be made by the July 15 due date of the return, not including extensions.
Most taxpayers who work and are under age 70½ at the end of 2019 are eligible to start a traditional IRA or add money to an existing account. Taxpayers can contribute to a Roth IRA at any age. Starting with tax year 2020, taxpayers of any age – even those over 70½ – can start a traditional IRA.
Contributions to a traditional IRA are usually tax deductible and withdrawals are generally taxable. Contributions to a Roth IRA are not tax deductible, but qualified withdrawals are tax-free. In addition, low and moderate-income taxpayers who make contributions to a traditional or Roth IRA may also qualify for the Saver’s Credit.
Eligible taxpayers can usually contribute up to $6,000 to an IRA for 2019. The limit is increased to $7,000 for taxpayers who were age 50 or older by the end of 2019.
Contributions to traditional IRAs are deductible up to the lesser of the contribution limit or 100% of the taxpayer’s compensation. Compensation is generally what a person earns from working.
Taxpayers should use Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the Saver’s Credit. The instructions have details on how to figure the credit.
Worksheets related to IRAs are available in the Form 1040 Instructions (PDF) or in Publication 590-A, Contributions to Individual Retirement Arangements (PDF). The deduction for IRA contributions is claimed on Form 1040 (PDF), Schedule 1 (PDF). Nondeductible contributions to a traditional IRA are reported on Form 8606.
Taxpayers should also be aware that special rules allow for tax-favored withdrawals and repayments from certain retirement plans for those affected by the coronavirus or those who suffer economic loss as a result of certain major disasters. Taxpayers can find answers to questions, get forms and instructions and find easy-to-use tools online at IRS.gov.
WASHINGTON—The Office of the Comptroller of the Currency (OCC) today released enforcement actions taken against…
WASHINGTON – Today, as part of the 30th anniversary celebration of the Community Development Financial…
Treasury imposes sanctions on dozens of Russian banks, securities registrars, and finance officials; OFAC issues…
WASHINGTON—Acting Comptroller Michael J. Hsu today testified on the state of the federal banking system…
As Prepared for Delivery Thank you very much for the opportunity to be here today, and…
As Prepared for Delivery Good afternoon. I’d like to start by thanking our panelists today for…