So I have until April 15th 2006 to open a 2005 IRA?

[HardDrive]

Oui?

[Big Ed]

Yes.

[84porsche]

Yup and I believe the limit is still $3,000. You have to look at your taxable income as well because I believe it starts phasing out at a certain level. It has been a couple of years since I have done tax work.

[Sonic dB]

Good question and topic.... any other tax tips for 2005? Im going to pay about $60K in taxes this year, even after my deductions. It sucks totally.

[john_colasante]

Originally posted by Sonic dB
Good question and topic.... any other tax tips for 2005? Im going to pay about $60K in taxes this year, even after my deductions. It sucks totally.

I hate to add insult to injury, but if you haven't paid any of that yet in the form of withholding or quarterly payments, you're going to have to tack on interest and penalties to that big payment.

[84porsche]

Originally posted by Sonic dB
Good question and topic.... any other tax tips for 2005? Im going to pay about $60K in taxes this year, even after my deductions. It sucks totally.

All depends on family situation for exemptions, then of course you have itemized deductions, qualified business deductions, charitable contributions and so and so forth. Is the $60k your AGI or is this what you pay out in taxes throughout the year? I hope you have set up some kind of withholding throughout the year.

http://www.irs.gov/formspubs/article/0,,id=109876,00.html
Major Tax Changes for 2005.

[Dixie]

Im going to pay about $60K in taxes this year...

Wow, My very-rough caluclations show your gross income is close to two-million a year!

[Big Ed]

Originally posted by 84porsche
Yup and I believe the limit is still $3,000.

2005 Limit is $4,000

[ken_xman]

Originally posted by Sonic dB
Good question and topic.... any other tax tips for 2005? Im going to pay about $60K in taxes this year, even after my deductions. It sucks totally.

Do you have any losses in an investment portfolio you can realize? Sell now, buy the underlying index fund, wait 31 days.
Buy it back afterwards. .... Call whomever is managing your portfolio....NOW!

Do you work for someone?... yourself?
Start a nonqualified deferred comp plan.... great tax channel.
Self employed- UNIK-401k plan... single owner 401k plan.
Many options.... late on time though.
Ken.

[HardDrive]

Originally posted by 84porsche
Yup and I believe the limit is still $3,000. You have to look at your taxable income as well because I believe it starts phasing out at a certain level. It has been a couple of years since I have done tax work.

Phase out? Were way beyond that. I get no tax benefits, I just want to sock away another 4k for retirement and have it grow tax deferred.

[Argeo]

Didn't read the other posts so I could be repeating.

Sorry, haven't got to 2005 rules yet but the rules typically don't change much except for dollars so this should be a good guide.

If your self employeed (HR 10 or Keogh Plan), in 2004 it was up to 40K or earned income.

Not self, $3K in 2004 ( I think $4K now), $6K for a married couple.

Over 50, there is an additional amount that is allowable, approx. $500. A catch up.

There is a phaseout as well.

Key thing, it is a above the line deduction not a credit which decreases AGI so it might prevent you from being able to deduct other deductions limited to a certain % of AGI.

Good luck,

David

[Hugh R]

You should have an IRA anyway. Look into a Roth IRA, aftertax income into Roth, no taxes when you withdraw at retirement. A regular one they'll tax you at your retirement income rate like ordinary income. So in twenty years, if you pull out $100k/year, they tax it as if you made $100k that year. By then they'll be taking half to pay for all the social entitlement programs they've voted in between now and then, not to mention the ones we already have.