It May Not Be Too Late to Reduce Your 2013 Taxes

You may still be able to reduce your 2013 taxes by contributing to a deductible retirement plan.

Apr 9, 2014 at 6:30PM

You have until 11:59 p.m. on April 15, 2014, to file your 2013 taxes. That's less than a week away. Time is running out, but there are still a handful of things you may be able to do now, in April 2014, to reduce your 2013 taxes. If you qualify, the easiest thing to do would be to fund a deductible traditional IRA for 2013. You have until that April 15 deadline to fund your IRA for 2013, and that deadline holds firm even if you apply for an extension to file your overall tax return.

Do you qualify?
To contribute to a traditional IRA, you must:

  • Not have reached age 70-1/2 (or older) by the end of the year for which you are contributing
  • Have taxable compensation of at least as much as you are contributing. Alternatively, you may also contribute if you're married and filing jointly and your spouse has sufficient taxable compensation to cover the total of both your contributions.

If you're eligible to contribute, the maximum you can invest in your IRA for 2013 is $5,500 -- or $6,500 if you reached age 50 or better in 2013. The rules on whether you can deduct your contribution are a bit more complicated. The two charts from the IRS below can help you make that determination for your 2013 contribution. The first chart shows the deductibility rules for your traditional IRA if you are not covered by a retirement plan at work, and the second shows the deductibility rules if you are covered by a retirement plan at work.

If you are not covered by a retirement plan at work:


Source: Internal Revenue Service.

 If you are covered by a retirement plan at work:


Source: Internal Revenue Service.

Are there other ways to save on your 2013 taxes?

If you happen to be self-employed, you have an even longer window to save on your 2013 taxes. The IRS will let you set up and fund a simplified employee pension, or SEP, as late as the due date of your taxes, including extensions. An SEP will let you contribute and deduct up to 25% of your net earnings from self-employment (excluding the value of the contribution itself), up to a maximum of $51,000 for 2013.

Either way, while the IRS offers you some flexibility in funding your retirement accounts for 2013, to take advantage of the tax savings now, your time is running out. If you want the tax savings for 2013, get moving before it's too late.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Chuck Saletta is a Motley Fool contributor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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