Taxability of Social Security BenefitsWritten by Richard A. Chapo
The IRS determines whether your Social Security benefits are taxable by looking at your total income and marital status. Form SSA-1099, which Social Security recipients should receive by January 31, shows your total benefits, but determining your taxable benefits requires putting pencil to paper.Generally, if Social Security benefits are your only income, your benefits are not taxable and you probably do not need to file a federal income tax return. If you received Social Security benefits plus other income, answer to how much, if any, is taxable can be found in worksheet in Form 1040 or 1040A instruction book. For a quick computation, add one-half of your Social Security benefits to all your other income, including tax-exempt interest. If this amount is greater than base amount for your filing status, a part of your benefits will be taxable.
| | Roth IRA ContributionsWritten by Richard A. Chapo
Confused about whether you can contribute to a Roth IRA? Try using these simple rules:Income To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than: $160,000 — Married Filing Jointly. $10,000 — Married Filing Separately (and you lived with your spouse at any time during year). $110,000 — Single, Head of Household, or Married Filing Separately (and you did not live with your spouse during year). Age There is no age limitation for Roth IRA contributions. Unlike traditional IRAs, you can be any age and still qualify to contribute to a Roth IRA. Contribution Limits In general, if your only IRA is a Roth IRA, maximum 2005 contribution limit is lesser of your taxable compensation or $4,000. For individuals age 50 or older, contribution limit is $4,500 The maximum contribution limit phases out if your modified adjusted gross income is within these limits: $150,000-$160,000 — Married Filing Jointly
|