Here’s how using tax-deferred savings can help you get that $1,400 stimulus check

Here’s how using tax-deferred savings can help you get that $1,400 stimulus check

Here’s what you need to know.

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The new $1,400 stimulus payments will be based on either 2019 or 2020 federal tax returns.

The IRS will use 2020 returns as long as they have been submitted and processed. The agency has said it will look at potentially topping up stimulus check payments for taxpayers whose 2020 returns show a drop in annual income from 2019.

The deadline for submitting 2020 tax returns has been extended this year to May 17 from the usual April 15 date.

The IRS has not yet confirmed whether the deadline for IRA contributions will also be May 17. However, Ed Slott, CPA and founder of Ed Slott & Co., said he thinks the IRA deadline will be extended based on the language in the tax code and how the IRS has handled similar changes in the past.

Contributions to a traditional IRA generally can be deducted. Roth IRA contributions are not deductible.

If you are single and your income is right around the $80,000 cap, you could consider fully funding the maximum amount in a traditional IRA — $6,000, or $7,000 if you are age 50 or over.

Source: cnbc.com


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