IRA deduction

[DaveO]

The withdrawal from her pension plan would disqualify her from the savers credit anyway.

[oceanlovin'ea]

Thanks

Thanks guys. IMHO, you are the greatest.

I just hope she can come up with $6000.

Linda

[ChEAr$]

Looks like good tax planning to me. You can put money into an IRA on Dec 31 and take it out on Jan 2 and still claim it as a deduction on the prior year's return, IMHO. As Lion pointed out, the savers credit might be affected, but if their marginal tax rate is 25% then it probably won't come into play anyhow.

And this is one of my absolutely favoritest way to save tax money. Actually one can
contribute to the IRA (no, not THE IRA in Northern Ireland! but an IRA), April 14th for 2009,
and maybe in a 90 day CD, withdraw it three months later.

And that $6000 can trigger the saver's credit and reduce other income which affects
taxability of social security income. It's a MAHvelus tool.

[JohnH]

Looks like good tax planning to me. You can put money into an IRA on Dec 31 and take it out on Jan 2 and still claim it as a deduction on the prior year's return, IMHO. As Lion pointed out, the savers credit might be affected, but if their marginal tax rate is 25% then it probably won't come into play anyhow.

[Lion]

Savers Credit

Unless the Savers Credit was involved during the relevant time frame. Don't remember how long before and after a contribution can qualify a taxpayer for the Credit without being disqualified by a distribution, two years maybe?

[oceanlovin'ea]

Is there any time limit as to how long you leave money in an IRA account?

Client worked for Walmart and retired in 2009. She took her retirement money out and paid off bills, etc. She owes $1500 now. If she were to put $6000 in an IRA, she would get a small refund.
She can take the money out in 2010 and probably not owe any taxes because she will only have social security.
But can she put the money in the IRA now and take it out in 2 months and not be in any kind of trouble?
Guess I am just thinking out loud. I couldn't find anything on this.

Linda