Tax Tips
April 2004
Planning for 2003 IRA Contributions
As you may be aware, the maximum contribution amounts for traditional and Roth IRAs were increased starting with the 2002 tax year. As you are eligible to contribute to an IRA account, you may be interested in these increased contribution limits.
Starting with the 2002 tax year, you may contribute up
to $2000 to your Roth or traditional IRA. This amount increases
to $4000 for 2005 and $5000 starting in 2008. In addition,
if you will be at least 50 years old before the end of this
year, you may make additional catch-up contributions to
your traditional and Roth IRAs. For 2003, the maximum catch-up
contribution for IRAs is $500. This amount will increase
to $1000 starting in 2006. Contributions for 2003 for both
traditional and Roth IRAs can be made until the due date
of your return, which is April 15, 2004.
2003 Retirement Savings Contributions Credit
As you may be aware, a tax credit for contributions made to an IRA or a qualified retirement plan was made available to eligible taxpayers beginning in 2002. Based upon your income, you may be eligible to claim this credit for any contributions or income deferrals you make to an IRA or other qualified retirement plan in 2003.
The Retirement Savings Contributions Credit is a nonrefundable credit that applies to contribution amounts not exceeding $2,000 per individual and is available through 2006. The credit is graduated and is based on both your filing status and adjusted gross income. The highest credit amount is 50 percent or $1,000 per individual. Below is a list of the credit percentage amounts by filing status and adjusted gross income levels.
Married Filing Jointly:
* Adjusted Gross Income: Not Over $30,000 - Applicable
Percentage 50%
* Adjusted Gross Income: Over $30,000 and Not Over $32,500
- Applicable Percentage 20%
* Adjusted Gross Income: Over $32,500 and Not Over $50,000
- Applicable Percentage 10%
* Adjusted Gross Income: Over $50,000 - No Credit
Head of Household:
* Adjusted Gross Income: Not Over $22,500 - Applicable
Percentage 50%
* Adjusted Gross Income: Over $22,500 and Not Over $24,375
- Applicable Percentage 20%
* Adjusted Gross Income: Over $24,375 and Not Over $37,500
- Applicable Percentage 10%
* Adjusted Gross Income: Over $37,500 - No Credit
All Other Taxpayers:
* Adjusted Gross Income: Not Over $15,000 - Applicable
Percentage 50%
* Adjusted Gross Income: Over $15,000 and Not Over $16,250
- Applicable Percentage 20%
* Adjusted Gross Income: Over $16,250 and Not Over $25,000
- Applicable Percentage 10%
* Adjusted Gross Income: Over $25,000 - No Credit
If you have any questions about how these rules apply to
your particular situation, please do not hesitate to call
the Certified Public Accountants at 512-343-8075.
