If I begin investing in an IRA today, can I deduct it on my 2006 tax return?

Question

Assuming I open an IRA today and make monthly contributions, is the amount I contribute before 4/15 deductible for my 2006 return??

Also, when starting the IRA and making my first contributions, do I have to elect somewhere that those amounts will be for 2006? Or is any amount contributed prior to 4/15/07 considered deductible for 2006???

Answer 1

You can only make deductions in the year in which you make contributions. Since you did not open a Traditional IRA in 2006, you contributions are not tax deductible for tax year 2006. If you open a Traditional IRA now, your contributions are tax-deductible for tax year 2007. You can make tax deductible contributions for 2007 to your Traditional IRA on the day you open it until April 15, 2008. For tax year 2008, you can make tax deductible contributions from January 1, 2008 to April 15, 2009. So, if you are investing between Jan 1 to April 15, make sure you check the right box on the application on which year you are contributing to.

Remember, any contributions you make tax-deductible will be taxable when you withdraw it.

Answer 2

Assuming you are eligible you can make a contribution to your Traditional or Roth IRA for 2006 up unitl the 15th of April 2007 but you do not receive a tax deduction for a contribution to a roth IRA. Regarding your follow up question, it's the deposit to the traditional IRA which makes the contribution eligible for the deduction...it does not matter whether it simply sits in a cash account or whether it is invested in stocks, bonds, etc.

Answer 3

You should be able to invest in IRA until 04/16/07 of this year. Verify with your tax planner though. Depending on the amount you earn, you may not be able to deduct that investment on your tax return.

Answer 4

You can make contributions to your 2006 IRA until 4/15/07
http://www.wwwebtax.com/adjustments/iras.htm

Answer 5

Yes, if you contribute to a Traditional IRA, not a Roth IRA, and you are not already contributing to another pre-tax retirement plan.

Answer 6

you may deposit your contribution up until 4/15..be sure the investment company codes the contribution as 2006. it is fully deductible.

Answer 7

YES you can contribute to 2006 tax return until April 15th, 2007....

Answer 8

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Answer 9

yep, just do so before 4/15/07.

Answer 10

YES!