IRA Contributions for 2021 Can Be Made Until April 18: IRS

The Internal Revenue Service reminded taxpayers Tuesday that they may be able to claim a deduction on their 2021 tax return for contributions to their individual retirement account made through April 18, 2022.

Contributions for 2021 can be made to a traditional or Roth IRA until the filing due date, April 18, but must be designated for 2021 to the financial institution, the IRS said.

Eligible taxpayers can contribute up to $6,000 to an IRA for 2021. For those 50 years of age or older at the end of 2021, the limit has increased to $7,000.

“Qualified contributions to one or more traditional IRAs may be deductible up to the contribution limit or 100% of the taxpayer’s compensation, whichever is less,” the IRS said. “There is no longer a maximum age for making IRA contributions.”

Those who make contributions to a 401(k) or 403(b), an IRA or an Achieving a Better Life Experience (ABLE) account may be able to claim the Saver’s Credit, the IRS said.

“Also known as the Retirement Savings Contributions Credit, the amount of the credit is generally based on the amount of contributions, the adjusted gross income and the taxpayer’s filing status,” the IRS states.

“The lower the taxpayer’s income (or joint income, if applicable), the higher the amount of the tax credit,” the IRS explained. “Dependents and full-time students are not eligible for the credit. For more information on annual contributions to an ABLE account, see Publication 907, Tax Highlights for Persons With Disabilities.”

While contributions to a Roth IRA are not tax-deductible, qualified distributions are tax-free.

“Roth IRA contributions may be limited based on filing status and income,” according to the IRS. “Contributions can also be made to a traditional and/or Roth IRA even if participating in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA-based plan).”