When tax time rolls around, consumers should turn to banks for help in order to reduce their tax obligations. Opening a retirement account, such as an IRA, provides a great financial opportunity. This could increase your overall tax return, or it could help defray what you owe. Most importantly, you can find this help at a nearby local financial institution. In order to get started, you'll want to book a simple appointment with your financial institution's investment manager.
What are IRAs?
First, you'll need to find out if you qualify for an Individual Retirement Account, or IRA. In many situations, you can reduce the amount of your taxable income by putting your funds into an IRA. Contributions made as late as the first due date for tax returns-April 15th, in most cases-count towards your previous year. These retirement accounts allow you to put money aside for use after you retire. The funds will grow without taxes throughout your lifetime. Depending on your retirement age, those funds could help you fully support your retirement years.
Find the Right Account
There are a few things you need to know about using this service before you decide to move forward. First, work closely with banks that offer IRAs. Not all banks offer such services. You'll want to take into consideration the financial security of the institution as well as the types of accounts available.
Max Out Your Contributions
No matter how much you put away for retirement, you will be benefiting in the long term. However, there are limits on the amount of investments that will actually apply towards a tax deduction. This also changes annually. It is a good idea to speak to your financial advisor about your specific limitations. For tax years 2014 and 2015, maximum contribution levels are $5,500. If you are over the age of 50, you can also use catch-up contributions of an additional $1,000. Any sum up to this amount put into an IRS-approved IRA will count towards your tax deduction.
Report Your Savings
When you fill out your 1040 or other federal income tax form, be sure to report the contributions made to these accounts.
Banks can help you establish your IRA or other retirement accounts. They can also help you automatically deduct the funds from your payroll earnings to deposit into these accounts. Additionally, they will help you with the necessary forms for reporting your income to the IRS when tax return time comes. This is a deduction you can make year after year.
