New Tax Year: Your 2020 IRA Contributions
For those clients with a US UK nexus, any planning undertaken from 6th April 2021 through to the end of 2021 will be done in the same US UK tax year, avoiding a potentially complicated mismatch. With this in mind, we thought a brief Spring clean of some financial planning thoughts might be valuable for our readers. Therefore, we have provided a series of three blogs on three different tax considerations that we hope you will find useful. The second, detailed below, is on 2020 IRA Contributions.
With the 2020 Federal Tax filing deadline being extended until 17 May 2021, please be aware that this also extends the time available to make a 2020 IRA contribution, if you have not already done so.
Additionally, while we are still early in the 2021 US tax year, you may want to consider making your 2021 IRA contribution, if applicable.
As a reminder, any individual who is deemed to have US earned income of at least the IRA contribution limits related to the applicable tax year, can consider making an IRA contribution. Earned income can be derived from outside of the US provided that earned income is not entirely excluded from US taxation through the use of the Foreign Earned Income Exclusion. Additionally, if you are a married couple filing jointly in the US and only one spouse has earned income, the spouse without earned income can be eligible to make an IRA contribution based on the other spouses earned income.
The annual IRA allowance for 2020 & 2021:
$6,000 ($7,000 if you are aged 50 or older)
If you would like to make a contribution to your IRA, or consider opening an IRA, please contact your Wealth Manager to discuss your individual situation.
Note: We understand that these considerations may not apply to all individuals. Should you have any questions then please contact your MASECO wealth manager to discuss these thoughts in greater detail, to ensure any action taken is suitable for each unique client situation.