Virginia Beach, VA (PRWEB) March 27, 2012
There’s still time to reduce taxes owed by contributing to an existing IRA (Individual Retirement Arrangement) or opening one at a bank or other financial institution. Liberty Tax urges taxpayers to plan ahead for retirement, and make contributions by the April 17 deadline to take advantage of tax breaks. IRA contributions may be fully or partially deductible. Taxpayers who contributed to an IRA or an employer-sponsored retirement plan in 2011 may be eligible for a Savers Credit of 10% to 50%. This nonrefundable credit is based on the return income, and can be up to $1,000 per taxpayer depending on Adjusted Gross Income (AGI). It can be taken in addition to the deduction of the traditional IRA contribution. This credit does reduce the taxable amount dollar per dollar, but not less than zero.
“Taxpayers covered by a pension plan can also deduct IRA contributions if they meet the modified adjusted gross income requirements,” commented John Hewitt, CEO of Liberty Tax Service. In 2011, a couple filing married filing jointly whose modified adjusted gross income is more than $90,000 but less than $110,000 can take a partial deduction for a traditional IRA, and so can single taxpayers (including head of household filers) making more than $56,000 but less than $66,000.
For taxpayers who are contributing to a Roth IRA, a couple filing married filing jointly can make up to $169,000, and a single taxpayer can make up to $107,000 and make the maximum contribution to a Roth IRA. The contribution limit for 2011 is $5,000 ($6,000 if age 50 or older) for both traditional or Roth IRAs. Taxpayers converting traditional IRAs to Roth IRAs are not subject to modified AGI and filing status requirements. Those who converted traditional IRAs to Roth IRAs in 2010 and didn’t report the taxable income must generally report half of it this year on their 2011 return.
Once again, taxpayers can take an allowance for tax-free distributions from individual retirement plans for charitable purposes on their 2011 returns.
About Liberty Tax Service
Liberty Tax Service is the fastest growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 9,000,000 individual income tax returns. With 42 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service.
Liberty Tax Service provides computerized income tax preparation, electronic filing, refund loans, and online filing through eSmart Tax. Each office offers customers audit assistance, a money back guarantee, and free tax return checking