Claimed IRA Deduction on Taxes But Did Not Deposit Money in Time

by Craig Woodman

    As of 2013, you may contribute up to $5,500 to IRA accounts as long as you have at least $5,500 in earned income. You may possibly claim a deduction from your taxable income for the full amount of a traditional IRA contribution, depending on your modified adjusted gross income and if you are covered by an employer-sponsored plan. Because of the deadlines for IRA contributions and when you file your return, you may claim a deduction for a contribution that is not made on time. In this case, you will need to amend your return and pay the taxes due.

    You must make any IRA contributions for the previous year by the tax filing deadline for that year. For example, if you are taking a deduction for a contribution for 2012, you have until the deadline for filing your taxes for 2012, April 15, 2013, to make the contribution that you are claiming the deduction for. The deadline for the contribution does not depend on when you file your taxes, so you could file your taxes early, receive your refund, and make your contribution from your refund by April 15 and still be compliant with IRS regulations.

    If your return shows a deduction for a contribution that you never made to your IRA account for the year that you are claiming it, and you won't be able to make the contribution by April 15, you will need to amend your return to correct this error. First, you need to complete an updated income tax return for the year, showing all of the amounts correctly. Then, you will need to complete Form 1040X, which shows the original amounts that you placed on your return, the amount that you are correcting each entry, and the new, updated entry.

    Since the loss of the deduction for a traditional IRA contribution will increase your taxable income, you will owe additional taxes because of this change. If you are in the 25 percent tax bracket and made a full contribution of $10,000 in 2012 for you and a spouse, you would owe an additional $2,500 in taxes on your amended return. You must send in a check for that amount when you file the return, along with a copy of the updated return that you prepared, as well as any supporting documents.

    If you eventually did make the contribution, just too late to meet the deadline for the previous year, you can leave the money in the account, and just use the funds towards the current year's traditional IRA contribution. The documents that the IRA custodian sends to you outlining the contribution should show the year of the contribution as the current year, allowing you to take the deduction on next year's taxes.

    About the Author

    Craig Woodman began writing professionally in 2007. Woodman's articles have been published in "Professional Distributor" magazine and in various online publications. He has written extensively on automotive issues, business, personal finance and recreational vehicles. Woodman is pursuing a Bachelor of Science in finance through online education.

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