Taxes 101

Individual Retirement Arrangements (IRAs)

For taxpayers covered by a pension plan at work, the modified adjusted gross income limit for deducting traditional IRA contributions has increased. A couple filing married filing jointly whose income is between $98,000 and $118,000 can take a partial deduction this year. Single taxpayers (including head of household filers) making between $61,000 and $71,000 can take a partial deduction. If MFS and the taxpayer lived with their spouse, the phase out is between 0 and $10,000. The contribution limit for 2015 is $5,500 ($6,500 if age 50 or older). For 2015, if you are at least 70 1/2 and have a distribution made by the trustee of an IRA account directly to a charitable organization, the distribution will be nontaxable. The total charitable distribution cannot be more than $100,000 ($200,000 if married filing jointly). IRA Additional Tax On Early Withdrawals Liberty Tax Service reminds you that now there is no additional 10% tax on early withdrawals from an IRA in the following two circumstances: one of these is buying a first home for yourself, your children or grandchildren. A maximum of $10,000 can be withdrawn for this home purchase. No additional tax is due if the withdrawal is used to pay higher education expenses for the IRA owner, spouse, child, or grandchild. The withdrawal is still subject to income tax.