Taxpayers Have More Time to Make Contributions to Certain Retirement Plans, HSAs for 2019 by Rick D. Bazzani, CPA
Posted on March 25, 2020
by
Rick Bazzani
The IRS has clarified that the extension of the 2019 federal income tax filing deadline to July 15, 2020, also applies to taxpayers’ contributions to traditional IRAs, solo 401(k)s and health savings accounts (HSAs).
Generally, the deadline for making these contributions is the due date of the taxpayer’s federal income tax return filing, which is usually April 15 of the following year. However, with the fallout from the spread of COVID-19, the IRS is giving taxpayers an additional 90 days to reap the tax savings from these plans and apply them to reduce their income tax liabilities for 2019. Given the pressure on liquidity at the present time, taxpayers should speak with their advisors to determine how they may be able to take advantage of this opportunity, especially at a time when investments are at historically low valuations.
For 2019, the maximum amount individuals may contribute to a traditional IRA is $6,000, or $7,000 when the taxpayer is age 50 or older. Contributions may be tax deductible, depending on the taxpayer’s, income, filing status and coverage by a workplace retirement plan. Assets grow tax free but are subject to tax when taken as distributions in retirement.
Self-employed taxpayers can contribute up to $56,000 to solo 401(k)s for themselves and a spouse for the 2019 tax year, or $62,000 for business owners and their spouses who are age 50 and older.
Individuals enrolled in high-deductible health plans may make tax-deductible contributions to an HSA and use those funds to pay for qualified medical expenses. For the 2019 tax year, the maximum contribution for a single taxpayer is $3,500, plus an additional $1,000 for individuals age 55 and older. HSA participants whose health plans also cover a spouse or dependent may contribute up to $7,000 for 2019.
About the Author: Rick D. Bazzani, CPA, is a senior manager in the Tax Services practice of Berkowitz Pollack Brant Advisors + CPAs, where he provides individuals and business owners with a broad range of tax-efficient estate-, trust- and gift-planning services. He can be reached in the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or at info@bpbcpa.com
Information contained in this article is subject to change based on further interpretation of tax laws and subsequent guidance issued by the Internal Revenue Service (IRS).
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