IRA Contributions Made by July 15 Count as ’19 Deduction

The postponed tax return due date of July 15, 2020 is fast approaching, and the IRS has issued a reminder that contributions to traditional IRAs made by that date are deductible on a 2019 tax return.

This means that taxpayers can file their 2019 tax return now and claim the deduction before the contribution is actually made. But the contribution must then be made by the July 15 due date of the return, not including extensions.

Most taxpayers who work and are under age 70½ at the end of 2019 are eligible to start a traditional IRA or add money to an existing account. Taxpayers can contribute to a Roth IRA at any age.

Eligible taxpayers can usually contribute up to $6,000 to an IRA for 2019. The limit is increased to $7,000 for taxpayers who were age 50 or older by the end of 2019. 

However, if a taxpayer is covered by a workplace retirement plan, the deduction for contributions to a traditional IRA for tax year 2019 is reduced if the taxpayer’s modified adjusted gross income (MAGI) is:

• More than $64,000, but less than $74,000 for a single individual, head of household, or a married person filing separately who didn’t live with their spouse at any time in 2019. No deduction can be taken if the MAGI is $74,000 or more.
• More than $103,000, but less than $123,000 for a married couple filing a joint return or a qualifying widow(er). No deduction can be taken if MAGI is $123,000 or more.
• More than $193,000, but less than $203,000 for a married couple filing a joint return where one spouse is covered by a retirement plan at work and the other is not. No deduction can be taken if the MAGI is $203,000 or more.
• Less than $10,000 for a married individual filing separately and lived with their spouse at any time during 2019. No deduction can be taken if the MAGI $10,000 or more.
• Even though contributions to Roth IRAs are not tax deductible, for tax year 2019 the maximum amount a taxpayer can contribute is reduced if their MAGI is:
• $122,000 or more for a single individual, head of household, or a married person filing separately who didn’t live with their spouse at any time in 2019. No contribution is allowed if MAGI is $137,000 or more.
• $193,000 or more for a married couple filing jointly or a qualifying widow(er). No contribution is allowed if MAGI is $203,000 or more.
• Less than $10,000 for a married individual filing separately and lived with their spouse at any time during 2019. No contribution is allowed if $10,000 or more.

The Retirement Savings Contributions Credit, also known as the Saver’s Credit, is often available for IRA contributors if their adjusted gross income falls below certain levels. For 2019, taxpayers may be able to claim the credit if their MAGI was not more than:

• $64,000 for married filing jointly;
• $48,000 for head of household; or
• $32,000 for single, married filing separately or a qualifying widow(er).

Worksheets related to IRAs are available in the Form 1040 Instructions or in Publication 590-A, Contributions to Individual Retirement Arrangements. The deduction for IRA contributions is claimed on Form 1040, Schedule 1. Nondeductible contributions to a traditional IRA are reported on Form 8606.