IRAs can provide extra tax savings in 2013, even though the end of the year has passed. There are several key tools that you can use now to lower your tax bill.
Extra contributions are one way to save on taxes. If you make a contribution by April 15, 2014, you can apply it to your 2013 taxes. You may also be able to avoid extra taxes on an early distribution through a properly structured extra contribution. Taxpayers with self-employment income may also be able to shelter income by setting up a Simplified Employee Pension (SEP) before their returns are due.
You may be able to use other tools if you expect to have lower income in 2014. If you made a Roth contribution in 2013, you may be able to convert it to a traditional contribution. You may also be able to back out of a traditional-to-Roth conversion made in 2013. Both of these techniques can result in significant tax savings for your 2013 return.
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