Memorandum

By Author: Sherry Roberts
Total Articles: 99
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TO: Samantha

FROM:

DATE:

RE; Contributions to an IRA for tax year 2014 and deductions on tax for contributions

Facts: Samantha is married and files a joint return

: Modified adjusted gross income before IRA contributions, $ 145,000

Issue: You may be able to claim a deduction for the amount contributed to IRA on your individual federal tax return.

Rule: Deductions may be limited if one is married and covered by a retirement plan at work.

Application
You can contribute to an IRA despite the fact that you participate in another retirement plan through your employer. IRAs are tax-deferred and, therefore, you do not need to pay tax on gains earned until you withdraw the amount. Regarding the tax deduction, the Internal Revenue Authority (IRS) restricts those who can claim deductions for IRA contributions. The fact that you are married and jointly filing, you do not qualify for any deduction because your modified AGI is more than $ 116000.
For 2014, your total contribution to all traditional and IRAs cannot exceed $ 5500 or $6500 if you are 50 years old or ...
... older. However, the limit does not apply to rollover contributions. With a roll over retirement plan, you are not supposed to pay tax until you withdraw it from the new plan. Once you roll over your payment, it becomes tax deductible if it is not already taxed or if you are a Roth distributor.
Conclusion
Contribution to IRA has the same effect on your taxes as the contribution to 401(k) plan. Instead, you can maximize your contribution to your employer’s retirement plan.

MEMORANDUM
TO: Angie and Bradley

FROM:

DATE:

RE; Contributions to charitable institution

Facts: A donation made to a qualified charitable organization may qualify you to a charitable contribution deduction.

: The deduction is made against your income tax if you itemize deductions.

: Married and jointly filing

Issue: qualifications for charitable contribution deductions

Rule: Not all charitable organizations qualify for charitable contribution deduction

Application
The actual cost of a donation is reduced by your tax savings if the gifts are deductible. It is dependent on your tax bracket. You are in the 39.6% tax bracket. The tax saving will be equal to 60.4% of the $ 14 million. The taxable income will be $ 8.456 million. You can only deduct contributions if they are made to a qualified recipient. Charitable contribution deduction is not allowed for gifts to certain other kinds of organizations regardless of the fact that they are exempt from income tax. Contributions to foreign charities, foreign governments, and certain private foundations are also not deductible. Charity Navigator rates organizations that qualify for charitable status. You can only deduct your donations, subject to certain limitations. The nature of such income is short term capital gain. Internal Revenue Code 170(e)(1)(A)
Your contribution to charity is more than 20% of your adjusted gross income, it is then necessary to be concerned about donation limits. In your case, the amount of contribution exceeds the 20% rate. The standard deduction amount for 2014 was $ 12400 for the married filing jointly. However, the deduction is limited to 50% of the contribution base if it is made to public charity. In the case you decide to give the whole amount in excess of the applicable limitation, the excess amount will be carried over for the next five years.

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