If you choose to contribute money to your IRA by April 18, 2022, you may still designate the contribution for the tax year 2021. Americans of any age may make 2021 IRA contributions, up to $6,000 if they are under 50, or up to $7,000 if they are 50 or older.
Many taxpayers may deduct contributions to a traditional IRA. However, if you or your spouse is covered by a workplace retirement plan, your contributions may be only partially deductible or non-deductible, depending on your income. Roth IRA contributions are not deductible, but taxpayers can receive qualified distributions from their Roth IRAs tax free.
Taxpayers who contribute to IRAs or ABLE (Achieving a Better Life Experience) accounts may also qualify for the Saver’s Tax Credit. The credit amount depends on a taxpayer’s income and filing status. Because credits lower tax on a dollar-for-dollar basis, they may result in greater tax savings than deductions. Eligible taxpayers may claim both the traditional IRA contribution deduction and the Saver’s Credit.
If you make an IRA contribution by the April 18th deadline and want to designate it for 2021, you must inform the financial institution of this choice.