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Put extra earnings to work in an IRA

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Q. I’m retiring soon. If I work into next year, can I deduct the maximum IRA contribution for 2014? E.H., Chicago

A. It depends on several factors. Generally, you can deduct the lesser of your annual compensation or a specific dollar limit. For 2013, the dollar limit is $5,500 ($6,500 if you’re age 50 or older). Figures for 2014 will be out soon. Also, deductions are reduced or eliminated if you (or your spouse, if married) actively participate in an employer-sponsored retirement plan, like a 401(k), and your adjusted gross income (AGI) exceeds an annual amount. Visit the IRS website.

Tip: Consider a nondeductible Roth IRA contribution as an alternative.

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