October 17, 2016
If you’re like many parents and grandparents, you may already be thinking about what kind of gift to get the children on your list this holiday season. For teens and young adults especially, it can be challenging to come up with truly unique and meaningful gifts. One idea with long-lasting impact is to make a contribution to either a traditional or Roth IRA on your children or grandchildren’s behalf.
IRS rules state that the maximum that can be contributed to an IRA each year is the lesser of the child’s earned income or $5,500 (the 2016 limit for an individual under age 50). So if your child or grandchild already has an IRA, you’ll need to know if they’ve already contributed to it this year.
If your child or grandchild does not have an IRA account already, you’ll need to decide on the type of IRA you would like to use for your gift (i.e. a traditional or Roth IRA). Traditional IRA contributions are tax deductible with taxes paid when the funds are withdrawn at retirement. Conversely, Roth IRA contributions are not tax deductible. However, the distributions, including earnings, are tax-free at retirement.
As long as your contribution to an IRA is below the annual $14,000 gifting exemption, it is not subject to any gift tax unless you give additional reportable gifts throughout the year. Keep in mind that such a contribution will not hold any benefits for you on your own income tax return.
If you have questions about an IRA holiday gift for your children or grandchildren, please contact our office.
Our most precious commodity is time—and our attention is a close second. That’s why everyone can use some help on how to tune out daily distractions. We compiled the following helpful tips from copyblogger.com to get you started on dialing down distractions:
The April 15 filing deadline is rapidly approaching, so we encourage you to send us your tax documentation as soon as possible to expedite the filing process. Here are four important reasons why you should file your return sooner rather than later:
This tax season is an important one for many business owners because it’s the first that will be impacted by the Tax Cuts and Jobs Act (TCJA). How big of an impact is dependent on your unique situation. We’ve compiled this short list of provisions that may affect the business community: