Tax Tip: No Extension for IRA Contributions

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NEW YORK (MainStreet) — Today is April 15th – but it is not “Tax Day”.

Because Washington, D.C. celebrates Emancipation Day today, a day earlier than normal because April 16th is a Saturday, the IRS has extended the filing deadline for 2010 income tax returns to Monday, April 18th, and the states have gone along with the change as well.

April 18th is not just the deadline for filing your tax return and paying your taxes though – it is also the deadline for making a traditional or Roth IRA contribution. And while you can submit a Form 4868 to extend the time to file your tax return, you cannot extend the time to make your 2010 IRA contribution.

You can extend the time to make a 2010 contribution to most self-employed pension plans, like a SEP, by filing for an extension, but it is not so for the basic IRA. So if you claimed a deduction for a contribution to an IRA on your 2010 Form 1040 you better make sure your contribution is in the account by Monday.

It is important when depositing money in your IRA that you identify the tax year for which the contribution is being made – on the check and on any accompanying payment voucher or coupon.  When you receive your account statement check to see the payment has been applied to the correct year.

Your IRA trustee sends the IRS a record of your contribution – if it is applied to the wrong year you might get a balance due notice from Uncle Sam down the road.

For all the latest tax tips as you prepare your 2010 returns, check out MainStreet's Tax Center, updated daily!

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