Limits
Your can contribute to a traditional IRA or Roth IRA. Your total contributions to either plan cannot exceed your earned income, or:For tax years 2008 and 2009, the dollar limits for IRA contributions will be:
- $5,000 if you are age 49 or younger,
- $6,000 if you are age 50 or older
From the IRS
"To contribute to a traditional IRA, you must be under age 70 1/2 at the end of the tax year and you, or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self–employment. In addition, taxable alimony and separate maintenance payments received by an individual are treated as compensation for IRA purposes."Source: IRS Tax Topic 451, Individual Retirement Accounts
Deadlines
You can contribute funds to your traditional or Roth IRA by the first deadline of a tax return, without any extensions. That means you can make a retroactive 2008 IRA contribution if you fund the account by April 15, 2009.Where to Claim the Tax Deduction
Report your tax deductible IRA contribution on Form 1040, Line 32, or on Form 1040A, Line 17. Do not include any amounts you contributed to a Roth IRA, which is not tax-deductible.
Phaseouts
Contributions to a traditional IRA might be deductible or nondeductible, depending on your age, total income, and whether you are covered by a retirement plan through your employer. For phaseout limits and other restrictions on the deductible portion of your IRA contributions, see How Much Can You Deduct in IRS Publication 590, Individual Retirement Arrangements. Tax software will calculate the deductible portion of your IRA contributions.Tax Tip
If your traditional IRA contribution is not deductible, you might want to contribute to a Roth IRA instead. A Roth IRA is much the same as a nondeductible IRA, but has fewer record-keeping requirements.
Additional Information:
IRS Publication 590, Individual Retirement Arrangements
