If you haven't contributed funds to an Individual Retirement Arrangement for tax year 2012, or if you've put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April 15 due date for filing your tax return for 2012, not including extensions.

Be sure to tell the IRA trustee that the contribution is for 2012. Otherwise, the trustee may report the contribution as being for 2013 when they get your funds.

Generally, you can contribute up to $5,000 of your earnings for 2012 or up to $6,000 if you are age 50 or older in 2012. You can fund a traditional IRA, a Roth IRA (if you qualify), or both, but your total contributions cannot be more than these amounts.

Note: IRA contribution limits increase in 2013 to $5,500 ($6,500 if age 50 or older).

Traditional IRA: You may be able to take a tax deduction for the contributions to a traditional IRA, depending on your income and whether you or your spouse, if filing jointly, are covered by an employer's pension plan.

Roth IRA: You cannot deduct Roth IRA contributions, but the earnings on a Roth IRA may be tax-free if you meet the conditions for a qualified distribution.

Each year, the IRS announces the cost of living adjustments and limitation for retirement savings plans.

Saving for retirement should be part of everyone's financial plan and it's important to review your retirement goals every year in order to maximize savings. If you need help with your retirement plans, give us a call. We're happy to help.

Taxpayers who converted amounts to a Roth IRA or designated Roth account in 2010 must report half of the resulting taxable income on their 2012 returns.

Normally, Roth conversions are taxable in the year the conversion occurs. For example, the taxable amount from a 2012 conversion must be included in full on a 2012 return. But under a special rule that applied only to 2010 conversions, taxpayers generally include half the taxable amount in their income for 2011 and half for 2012, unless they chose to include all of it in income on their 2010 return (filed in 2011).

Roth conversions in 2010 from traditional IRAs must be reported on either Form 1040 or Form 1040A. Conversions from workplace retirement plans, including in-plan rollovers to designated Roth accounts, should also be reported on either Form 1040 or Form 1040A.

Taxpayers who also received Roth distributions in either 2010 or 2011 may be able to report a smaller taxable amount for 2012.

Taxpayers who made Roth conversions in 2012, or are planning to do so in 2013 or later years must file Form 8606 to report the conversion. As in 2010 and 2011, income limits no longer apply to Roth IRA conversions.

If you need assistance reporting Roth rollovers and conversions that you've made in previous tax years, don't hesitate to call us. We're here to help!

Welcome 2013! As the new year rolls around, it's always a sure bet that there will be changes to the current tax law and 2013 is no different. From health savings accounts to retirement contributions here's a checklist of tax changes to help you plan the year ahead.

For 2013, standard deductions and the personal exemption, as well as most retirement contribution limits have been adjusted upward to reflect inflation. In addition, tax rate structure and other tax provisions have been modified or extended by the American Taxpayer Relief Act of 2012, commonly referred to as the "fiscal cliff" bill. (more…)