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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: open Traditional Roth IRA Date: 1/22/2008 3:41 PM
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I was doing my taxes online today, and it appears that I've earned interest in a savings account, none of which was withheld. Long story short, I now owe taxes!

Why would you expect taxes to be withheld from your savings account? That's rarely, if ever, done except when you are subject to backup withholding for underreporting income in a prior year.

I'm wondering if I can minimize my taxes by opening a Traditional IRA and contributing money to that by April 15th... I know that contributions until April 15th count towards the last tax year if the account already exists... What if I have to create the account?

You can open a new account before April 15th and contributions to it will still count for 2007. Any deductible contributions will lower your tax liability for the year. But see below.

(PS I also have a Roth account and 401K)

This changes things in two different ways. First, being covered by a 401(k) plan lowers the income limit under which you can deduct contributions to a traditional IRA. Second, your total contribution to all IRAs, traditional or Roth, is $4000 ($5000 if you're 50 or older). If you've already contributed the max to your Roth, you can't make any additional contributions. However, you can recharacterize your Roth IRA contributions (plus earnings) as traditional IRA contributions.

Ira

Many thanks...
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