Broker Check

Spring into Tax Season!

| April 02, 2024

April is my favorite month of the year. Not just because Spring has finally arrived in the Midwest. Or because the days are getting longer, and the temps are getting warmer. Not even because it’s my birthday month! It’s because the annual trip around the sun brings us to the day, we all talked about for the other 365… Tax Day.

 

Yep, I love Tax Day! For someone that talks about taxes all year long, it’s the big show. The day of reckoning. The day that tests my strategic moves all year long, as I try to neutralize portfolio and retirement income taxation at every turn. Do you know how many times I have to say to a client “Please consult with your tax advisor” and then I must patiently wait until they do… in April!!

 

For most, April is a stressful month as the process of gathering documents can be tedious. For me, it is the month that my stress is released as I am given the final decision for ROTH IRA conversion amounts, annual SEP IRA contribution amounts, prior year IRA contribution qualifications, deductible IRA amounts based on income limits, ROTH IRA contribution eligibility… basically it’s the day my clients have finally consulted with their tax advisor. April is also the most popular month of IRA shoulder season where we can make IRA contributions for the prior year and current year at the same time. It’s like having a jet pack on a retirement account and that’s cool.

 

Now, for those of you snowbirds and small business owners out there who file extensions every year, April may not bring you the same joy. Maybe you are a May Tax Day person since that is when most retirees fly home for the summer? Maybe you are inclined to wait as long as legally possible to file your taxes and October is more your style? I see you, but please be aware that just because you file an extension for your tax return does not mean you can also extend the IRA contribution deadline. It remains April 15th, or the following business day if Tax Day falls on a weekend or holiday, thus making April still the greatest month of the year.

 

Okay, okay… maybe its does have a little to do with my birthday which is April 16th. I am sometimes a Tax Day Baby. 😊

 

Kimberly Enders CFP® CWS® CERTIFIED FINANCIAL PLANNER™

Enders Wealth Management

37800 Van Dyke Ave, Suite 125

Sterling Heights MI 48312

www.enderswm.com

#kimenderscfp

 

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Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. Converting from a traditional retirement account to a Roth retirement account is a taxable event. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first-time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.