Author Archives: c12734001

Tax Filing Deadline for Overseas filers is June 17, 2019

Gentle reminder that  If you are a U.S Citizen living abroad or a Green Card Holder living abroad or in active military service and have not filed your taxes yet, the deadline is coming up on June 17th, 2019.

The extension is for the date to file, not to pay. Any interest on the taxes owed will be calculated from the regular due date of the return, April 15th, 2019.

Tax Tip for Education

A big tax benefit of the 2017 Tax Cuts and Jobs Act (TCJA) was to expanded eligibility for 529 savings plans. The 529 education savings plan was previously limited to only post-secondary education (i.e., college). However, the TCJA expanded it so that it can now be used for Kindergarten through Grade 12 education (public, private, or religious schools).

 

529 tax free investment growth: If you put money in a 529 account for education, the withdrawal of earnings are federal tax-free if used for qualified educational expenses. Qualified educational expenses include tuition, fees, housing, meals and books. Many states offer a full or partial tax deduction for 529 plan contributions.

 

529 State Income tax benefits: 30 states offer a state income tax credit or deduction. The amount varies by state. For example, in New York you can deduct from your computed state income up to $10,000 per year (married filing joint, $5,000 per year individual). The full amount you can contribute will grow tax free but only up to $10,000 per year can be deducted for state income tax calculations. In Maryland you can deduct up to $2,500 of contributions per beneficiary ($5,000 for 2 beneficiaries, $7,500 for 3 beneficiaries, and so on).

 

529 Max contribution limits: in 2019 a contribution for child’s future education is considered a gift for tax purposes. You can contribute up to $15,00 per individual. You can contribute $15,000 and your spouse can contribute up to $15,000 to that same individual.

 

Here is an IRS link and a state of Md link where you can read more about it.

https://www.irs.gov/newsroom/529-plans-questions-and-answers

https://maryland529.com/college-savings-plans-of-maryland/maryland-college-investment-plan

More and more college students are graduating with significant college debt. Start saving now to avoid that snare and start investigating ways to do college debt free. Below is a link that will start with you some good ideas on how to do college deft free:

https://www.daveramsey.com/blog/pay-for-college-without-student-loans

Introduction to selecting a Business Entity

If you are very good at what you do and know the business area for your set of skills then one of the most effective ways to create wealth is to start and operate your own business. When you operate your own business there are significantly less limits on your income than the alternative of being an employee with a job. There are also significant tax advantages to operating your own business. If you decide to go into business for yourself then one of the most important decisions, you will make is the choice of entity type. Each entity type (i.e., business form that has legal rights and obligations) has advantages and disadvantages. There is not a best legal entity type for everyone. Which entity is best for you depends on your unique situation and that can change over time. I changed my entity type as my business matured.

 

Below is a list of business entities available to tax payers along with a brief summary of some advantages and disadvantages.

 

  • Sole Proprietorship

The sole proprietorship is the most commonly used business entity. It is not a legal entity separate of apart from its owner. The income or loss is reported on the schedule C of the owners from 1040.

Advantages: Easiest to establish and requires no special forms, profits are only taxed once on owner’s personal return, owner has complete control & makes all decisions, tax forms are not complicated, assets are easy to liquidate at death of owner.

Disadvantages: owner has unlimited liability, the owner’s personal assets are exposed without limitation to any business debts/liabilities.  The business can’t be transferred. The owner reports the sale as if each asset were sold, borrowing money is more difficult, can’t accept capital from outside investors.

 

  • C Corporation

Corporations were created to limit the liability of the owners. The C Corp files a separate return from its owners.

Advantages: Owners personal assets are protected from creditors. Creditors can only go to the corporation for settlement of debts, can sell stock, issue bonds, & get bank loans to raise capital.

Disadvantages: C corporations are double taxed. First the income is taxed to the corporation as it is earned and second the income is taxed when the corporation distributes the income in fhe form of dividends. Closely held C corporations are subject to At Risk rules which means the tax laws limit the amount of losses an investor (e.g. limited partner) can claim (only the amount at risk can be deducted). C Corporations are a complex business structure.

 

  • S Corporation

The S Corporation is a special type of corporation that is not taxed and the income is passed through and taxed to the shareholders. Over one half of all corporations are S corporations. They tend to be small in size and number of owners.

Advantages: Owners personal assets are protected from creditors like the C corporation, no double taxation because income is passed to owners, lenders work with S Corps.

Disadvantages: Must file articles of incorp with the state, limited to 100 shareholders, can only have 1 class of stock, fringe benefits provided to shareholders and employees are taxed as compensation, ownership restrictions.

 

  • Partnerships

A partnership is a sole proprietorship with more than one owner. There are several forms of partnerships available to taxpayers (general, limited, limited liability)

Advantages: Easy to form, Use different talents to share in running the business, continues if one partner dies, Income is taxed once because the income flows through and is taxed on each owner’s personal tax return.

Disadvantage: Unlimited liability, Owners are held liable for partnership debts (this is for a general partnership), management conflicts if owners disagree (no one person is in charge), partners share of the profits may not be adequate for their contribution.

There are limited partnerships where owners are divided into general partners and limited partners. Limited partners have only limited liability, but they are not allowed to participate in the operation of the business. A “limited liability partnership” is used mostly by personal service taxpayers.

 

  • Limited Liability Companies (LLCs)

The LCC is a noncorporate hybrid business structure that combines the tax advantages of a general partnership with the limited liability of a corporation.

Advantages: Complete pass through tax advantage to owners, operational flexibility of a partnership, limited liability (like a corporation), no restrictions on numbers and types of members/shareholders, members participate in the management of the LLC and share in profits as owners/shareholders, owners choose how pay taxes(as proprietorship, partnership, or corporation), most states don’t require annual mtgs, no requirements for a board of directors.

Disadvantages: Accounting and legal costs are higher than proprietorships, must file articles of incorporation with state, owners must define operating agreement that defines decision making authority, may cease to exist at death of a member unless specified in operating agreement.

 

This was a brief introduction. If you would like to learn more details to see which is best for your business, you can reach me at my phone number or email address shown on this website.

Investment Tip Part 2

Before I get back to tax related topics I wanted to provide one more blog on investing tips.

 

Previously I encouraged you to invest a good percent of your tax refund to create wealth for you in the future rather than spending it all now. I gave you several statistics showed that most millionaires were normal folks that did not have paying jobs but became millionaires by simply investing in their employer sponsored retirement plan for 20+ years. Their wealth came far more from the compound interest on those deposits each month than the sum total of the deposits.

 

On the second investing blog I encouraged you to invest in assets that create income. I mentioned several options and focused on easiest and most common for millionaires which is ownership in companies through the stock market. I will talk about real estate in future blogs as it has many tax advantages. I stated that the 2 biggest drivers for creating wealth in stocks was the amount of money you invested each month and the percent of the investment in stocks over bonds. I pointed out that over the long run the owners of diversified portfolio of stocks made a higher return than the safer route of being an owner of bonds/loans. I recommended you diversify and keep your fees and rates low by using a buy and hold strategy and investing in globally diversified index funds. Index funds have lower fees than mutual funds and numerous studies show that over the long run passive investing with index funds tend to produce higher returns than actively managed mutual funds. I pointed out in addition to lower management fees index funds have the advantage of more consistently (i.e., over 10 years) capturing the return of the market than most actively managed funds due to efficient (i.e., fairly priced) markets.

 

The following 2 new investment tips can be summarized as:

  • If you choose to use an investment advisor use a fiduciary and one who is willing to teach you
  • Invest DON’T Speculate

 

I recommend a fiduciary because a fiduciary is licensed by the SEC and is legally required to put their client’s interest ahead of their own. They are held to a higher ethical standard. They are only paid by their client. They are not paid the investment vehicles they recommend so there is no conflict of interest or financial incentive for them to recommend one fund over another. Their only incentive is getting their clients the highest return for the lowest risk.

 

Advisors who are not fiduciaries often have an inherent conflict of interest that they are not required to reveal. The conflict of interest is they are usually incentivized by their employer and/or the investment vehicle to put their clients in funds that have higher fees so they get paid more.  For example, they get paid higher commissions by putting clients in actively managed funds rather than passive, no load index funds. So there is a temptation for them to recommend the high fee funds. They are usually paid significantly less for putting their clients in no load index funds which makes it tempting to NOT put the clients best interest first. Many resists the temptation and put their clients first but there is less risk with a fiduciary who is required by law to always put your best interest first.

 

I recommend advisors who are patient and spend the time needed to teach you so you understand what you are investing in and why you are investing in it. Good advisors make sure you understand your options and have you (not them) make the decisions. I don’t like pushy salesman who pressure me to follow their advice. My advisor makes no decisions. He advises me, makes recommendations based on my scenario and risk tolerance and has my husband and I make the investment decisions.

 

I also recommend you ask yourself with each investment decision if you are making a real investment or if you are speculating. Investopedia defines investing as “seeking to generate a satisfactory return on capital by taking on an average or below average amount of risk”. Investopedia defines speculation as “seeking to make abnormally high returns from bets that can go one way or the other”. Speculating is one step above gambling which is seeks return on pure chance.

I recommend you avoid speculating and only buy assets that have average or below average risk.

I personally do not invest in individual stocks and instead use Index funds because they have significantly less risk and provide a satisfactory return (the definition of investing). I do not invest in gold, futures or commodities because the high returns can just as equally be high losses. I would rather invest in something that patiently and more surely creates wealth (i.e., a bunch of companies in an index fund) than go for a quick return bet on the price of an item (i.e., gold, commodities,…) going up rather than down which I think is speculating.

 

What ever approach you decide to take to investing the most important thing is that you don’t spend all you make and instead invest and invest regularly.

 

Tip on How to Invest that Tax Refund

In my last blog I encouraged you to invest your tax refund to create wealth for you in the future rather than spend it all now. I gave you several statistics from the book “Everyday Millionaires” by Chris Hogan that showed that most millionaires were normal folks that had no special privileges and that did not have paying jobs. 79% of them became millionaires by simply investing in their employer sponsored retirement plan for 20+ years. Their wealth came from the compound interest on those deposits each month. For the steady long-term savers, the rule of thumb is ~30% of the money in their accounts came from them putting money in and 70% of the money in their accounts came from the compound interest earned on the money they invested over the 20+ years of steady investing. The compound interest created their wealth.

 

Those that study the wealthy usually recommend the most effective ways to invest are:

  • Invest in yourself. Examples include investing in books, training, mentoring, and so on to develop your God given natural gifts to become the best (i.e., top 10%) at what you do at your job or in your own business.
  • Invest in assets that create income. While there are many assets that create income the most proven & reliable assets to create income are:
    1. Ownership of the Stock Market
    2. Ownership of Real Estate
    3. Ownership of your own business
    4. Ownership of Intellectual Property (inventions, published books, training, etc…)

 

In each case the asset creates the wealth and because you are the owner the wealth goes to you. This blog will focus on investing tips for ownership of stocks (based on lessons learned from my investment geek husband).

 

Lets begin with what is most important. The 2 biggest drivers for creating wealth through investing in stocks are:

  • The amount of money you put in each month
  • The percent of investment in Stocks vs Bonds

 

While there are many other parameters such as, the particular funds & industries you invest in, the advisory fees, the fund fees and so on it is important to realize that  the 2 biggest determiners of your future wealth is that you consistently put money in each month to investments that a good percent of those investments are in stocks. Stocks have far more risk that bonds but the reward for taking that risk is a larger return over the long term (>10years). I like the slogan “Be an owner not a loaner”. In other words, you have a higher likelihood of creating more wealth statistically by owning a piece of publicly traded companies than by investing in bonds where you are part owner of a loan. In general businesses create more wealth over the long term than loans. However, if you need the money in <10 years then stocks are not worth the risk. They money in stocks is much more likely to be made if you buy and hold for >10 years.

 

When investing in stocks there are risks that you can mitigate and there are risks that you can’t mitigate. The risks that you can mitigate are:

  • The risk of individual stocks going bankrupt (e.g., Enron, Lehman Brothers, etc..) or loosing significant value
  • The risk of stock industries (e.g., health care, financial, real estate, technology companies, etc….) loosing significant value

 

Both risks are mitigated through diversification by owning as many stocks and industries as possible rather than just a few. In other words, by investing in globally diversified index funds or mutual funds you reduce your risk by effectively owning a small piece of all the companies in the market rather than just a few. There is less risk in owning 10 thousand companies in index/mutual funds than owning 10 companies. This is because when some companies have significant losses their losses are averaged out by the significant gains of the companies that had record years. There are many studies that show how difficult it is to pick the companies in advance that have the record years. The statistics show that the folks that do well at picking stocks do not persist at it. They may do well in one year, two years, even three years in a row but most don’t do well at it for 10 years in a row. The huge percent (e.g. >99%) of stock pickers that are unable to persist in picking the winners 10+ years in a row cause the studies to conclude that when they do pick winners it is more due to luck than skill. The big winners in one year are often the big losers in the next year or a few years later. The reason for tagging it as luck is due to what the academics call the “efficient market hypothesis”. Well known academic Eugene Fama (Nobel Prize winner in Economics in 2013) used that term to mean that all the available information on companies is already built into the stock price and therefore the prices are fair. In our free market where millions of investors are making trades each day by putting out bidding prices and asking prices those prices are based on what will attract willing buyers and willing sellers who have access to all the same information on the stocks. This means in general each stock is priced fairly to both the buyers benefit and the sellers benefit so that they are both motivated to make the trade. This means there is ~ a 50% probability the stock price will go up in the future and a 50% probability the stock price will go down in the future. When stocks are priced fairly then what determines the future price is future news about the companies which no one knows. This means unless you have insider (i.e., illegal information) you have as much likelihood of picking a winner as a looser. Therefore, few people can pick winners consistently and when they do it is more due to luck than skill. This means the wisest thing to do is to not try to pick individual stocks and instead invest in large globally diversified index/mutual funds so that you capture the returns of the market to effectively get the bird in the hand than try for the 2 in the bush and come up empty.

 

The risk you can’t mitigate is the risk of the entire stock market having a significant loss. This happened in 2008 when almost all stocks lost significant value. However, you can manage this risk by:

  • Buying and Holding stock funds for >10 years. For most periods of 10 years or more the owners of a large % of the market (e.g., via index/mutual funds not individual stocks) made a profit rather than a loss. Those that traded when the market went down rather than held on to the funds usually lost money.
  • Investing in passive index funds rather than actively managed mutual funds to reduce the trading costs, reduce the yearly tax on profitable transactions, & reduce management fees.
  • Having bonds in your portfolio whose profits & losses are not correlated with stocks.

 

In summary, the investment tip here is to invest in passive, no load, globally diversified index stock funds to capture the returns of the market and to consistently buy and hold them for >10 years.

Invest Your Refund rather than Spend it

If you get a tax refund this year here is some motivation to help you invest your refund to create wealth for you in the future rather than spend it all now.

 

It is often stated by those that study the wealthy that one of the significant differences between the wealthy and those that struggle to get ahead financially is that wealthy think long term and make decisions based on what is best for them in the long run. Those that were able to achieve wealth were willing to make sacrifices now in order to realize the gain 10+ years in the future. Those that struggle to get ahead financially tend to think short term and make financial decision based on what is best for them now or the next few months rather than what is best for them in 10+ years.

 

Studies show that the wealthy establish an unbreakable habit of steadily investing a portion of their income each month into assets that create income. They build their wealth month by month. They slowly but surely create wealth by patience and persistent investing rather than by taking shortcuts through high risk get rich quick approaches. Slow and steady wins the race as illustrated in the story Tortoise and the Hare.  On the other hand, those that never seem to be able to get ahead financially are not willing to cut expenses in order to regularly invest in stable assets and so they don’t benefit from wealth created by compound interest.

 

Many of those that have well over $1 Million in their retirement accounts by steadily investing for 20+ years only put in ~ 30% of the money that is in their accounts. The other ~70% of the money that is in their accounts came from compound interest. In other words, most of their wealth is not from what they put in each month but from the return on what they put in each month.

 

You don’t have to be a high-income earner to achieve wealth. A recent study of 10,000 millionaires stated that 1/3 of the millionaires interviewed never had a six-figure household income in a single working year. It said only 31% of the millionaires they interviewed averaged $100K household income a year and only 7% averaged over $200K household income over the course of their year. These numbers are from the book “Everyday Millionaires” by Chris Hogan page 73. Other interesting statistics in this book are:

“79% of millionaires did not attend prestigious private schools. 62% graduated from public state schools, 8% attended community college and 9% never graduated college at all.” (Everyday Millionaires by Chris Hogan, page 63).

“The average millionaire hits the $1million mark at 49 years old. This is after years—decades, in fact– of hard work. Only 5% of millionaires got there in ten years or less. (Everyday Millionaires, page 52)

“79% of millionaires reached millionaire status through their employer-sponsored retirement plan” (Everyday Millionaires, page 41)

“76% of millionaires say that anyone in America can become a millionaire with discipline and hard work (Everyday Millionaires, page 26)

“79% of millionaires received zero inheritance, meaning only 21% received any inheritance at all. 84% received $0 to $100,000, which means that 84% of millionaires did not receive enough inheritance to make them a Millionaire (Everyday Millionaires, page 20)

 

This study gives hope to all of us. A rephrasing of the key points and statistics summarized on p84 of Hogan’s book is that most millionaires did not inherit their money, they did not get lucky, they did not make risky investments, they did not take high risks to get rich quick, they don’t come from prestigious schools, and most surprising is that they did not have high paying jobs.

 

I think that is very encouraging. It says we can all do this. It is not out of our reach. Start the journey and try to invest that tax refund. Read from those that will encourage you to save and invest. In the next few blogs I will provide some investing tips to help you avoid some common pitfalls on your journey.

 

Tips for Tax Refunds

If get a tax refund and the amount is different than what is stated on the filed tax return, part or all of your refund may have been used to pay off (offset) past-due federal tax, student loans, state income tax or other past-due debts.

You’ll receive a notice from the IRS if such an offset occurs that will show the original tax refund amount, the offset amount, as well as the name, address and telephone number of the agency receiving the payment.

If you have not received your refund yet, you may check the status using the tool at: https://www.irs.gov/refunds. The ‘Where’s my Refund’ tool is updated once daily, usually overnight. Your status is generally available within 24 hours upon the IRS receiving your e-filed return and 4 weeks after mailing your paper return.

IRS keeps your refunds if you don’t file within 3 Years of Due Date

If you are owed a refund the only way to get the refund is to file the tax return within 3 years of the due date. Current tax law gives you 3 years to submit a tax return in order claim and receive your refund. If you file your return over 3 years late and are owed a refund you will not get the refund. Ouch, that can hurt. There are currently more than $1.4 Billion in unclaimed tax refunds.

 

For example, if you did not file your 2015 tax return (which was due April 15, 2016) and over paid your taxes by $2,000 through pay check deductions in 2015 or through extra quarterly estimated payments in 2015 you would have had to file your 2015 tax return by April 15, 2019 (3 years from due date of April 15, 2016) in order to get your $2,000 refund from overpayment in taxes in 2015.  The only exception is if you filed an extension before the 2015 due date of April 15, 2016. If you filed an extension then you have until October 15, 2018 to file your return to get your refund.

 

If you do not file a tax return for 10 years and then file 10 years of tax returns at once and are owed refunds for all 10 years, then you would only get your refunds for the most recent 3 years. You will have lost all opportunity to get the refunds on the returns that over 3 years old. That can be a shock to many taxpayers.

 

However, if you owe the IRS money from an unfiled tax return there is no limit (i.e., statute of limitations) for how many years can pass for the IRS to collect tax due for unfilled returns. So, if did not file a return for 10 years and then file 10 years of tax returns and owed the IRS money for each of those 10 years then you will have to pay the taxes for all those 10 years. On the other hand, if you file a return the IRS has a statute of limitations for how long they have in order to collect the taxes on that return (provided there is no fraud in the return).

 

The bottom line is to file those late returns as soon as possible, so you don’t miss the opportunity to get your tax refunds.

Better to File your Your Return and Not Pay than to Not file at all

If you can’t afford to pay your taxes by the filing deadline you are not alone. If you don’t have the money to pay your taxes on time you are far better off to file your return on time and don’t pay the taxes owed or file a request for an extension than not file a return at all.

As stated in a previous blog, not filing your return will cost you an additional 5% penalty of unpaid tax each month. This penalty is far worse than the additional 0.5% penalty each month you get for filing on time and not paying what you owe.

The failure to file penalty will max out at 25% of your unpaid taxes which you will reach if you don’t file for 5 months. However, the 0.5% failure to pay penalty will continue to accrue up to another 25% of what you owe until the tax is paid.

If you don’t file a tax return by Monday April 15, 2019 or don’t file for an extension, then the 5% penalty for not filing starts April 16th . The  IRS charges interest on the taxes you owe and they charge interest on the penalty fee for not filing.

If you don’t have the money to pay your taxes the 3 best options are:

1) Request an extension to pay by October 15, 2019.

You can request an extension by:

  1. Use the IRS’s free (irs.gov) website located here: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
  2. Use your tax software to file from 4868 (if it has the capability)
  3. Paper file form 4868
  4. Authorize a tax pro to request the extension for you.
  5. Call the IRS (not recommended, online is a better approach)

2) Request a streamlined installment agreement (if you owe < $50K and can pay in 72 months)

An installment agreement is a payment plan. It is called “streamlined” because the agreement takes significantly less paper work than if you owed more than $50K or needed more than 72 months to pay it.

You can request a streamlined installment agreement by:

  1. Use the IRS’s free (irs.gov) website located here:https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
  2. Authorize a tax pro to request the installment agreement for you.
  3.  Call the IRS at 1-800-829-1040 (not recommended, online is a better approach

3)Request a NON streamlined installment agreement (if you owe >$50K or can’t pay in 72 months).

The Non streamlined installment agreement requires you to provide additional documents  (Form 433-A or Form 433-B) to the IRS showing your full financial situation. The IRS will use these additional documents to determine how much you can pay from a combination of equity in your assets and from monthly installment agreements.

If you are in a situation where you owe >$50K an option to consider that could reduce the paperwork burden is to use your assets to reduce your tax bill to <$50K and then set up a streamlined agreement for the remaining balance.

Sometimes these penalties and interest can be abated or removed. Contact me to learn more about how that is possible. If the IRS has contacted you for an audit or if you have not filed back returns then I can help you. I am a tax debt resolution specialist and am licensed to represent you before the IRS

Last-minute Tax Tips & Key Tax Law Changes

You might be surprised to see you owe taxes this year when you were expecting to pay less taxes due to the tax law changes. Many Americans did pay less compared to 2017 taxes but less tax was taken out of their paycheck and the cumulated effect was they owed more when they filed.

Below are a few of the key changes to the tax law for this filing season:

  • Tax Rates Dropped (& some income thresholds increased in higher brackets):

From 2017: 10% 15%, 25%, 28%, 33%, 35%, 39.6%

To    2018:  10%, 12%, 22%, 24%, 32%, 35%, 37%

 

  • Standard Deduction increased:

From 2017: Single ($6.35K), MFJ ($12.7K) Head of House($9.35K)

To     2018: Single ($12K), MFJ ($24K) Head of House($18K)

 

  • Personal Exemption Deduction was removed

From 2017: $4.1K per personal exemption (no limit for # dependents)

To     2018:  Eliminated

 

  • Child Tax Credits Increased & Expanded & phase out income thresholds increased

From 2017: $1K per qualifying child under 17

To     2018: $2K per qualifying child under 17

2018: $500 per qualifying child 17 to 24 and non-child dependents

Note: the previous personal exemption deduction lowered your income level from which you were taxed but the child tax credit is a dollar for dollar direct reduction to the taxes you owe. So a $500 credit is far more valuable than a $500 deduction.

Also, the income phase out thresholds are significant higher than last year which made the child credits available to far more people than previous years. The credits are available to many who previously did not get the dependent reductions due to the alternative minimum tax.

 

There were many more changes that are too lengthy to address here. One of the downsides of the new tax law is it took away the deductions for employee expenses. The tax laws have always favored the self-employed and business owners over the employed. If you are an employee and your employer is not offering retirement plan matches, flex spending accounts, vacation/sick time and just pays 50% of your self-employment tax consider switching to a 1099 contractor.  In future blogs I will be addressing tax benefits of being self employed or doing a side business.  In the meantime, as we near April 15th consider the following 2 options to reduce your taxable income if you have not already done so.

  • Contribute to an HSA (Health Savings Account) if you have a high medical deductible.

Limits are $6.9K/family & $7.9K/family if >55yrs old

  • Max out retirement plans (e.g., SEP IRA, Solo 401Ks)

If you do not have the cash to fund those consider filing an extension, pay your taxes due on April 15 to avoid the penalty and then pay the max limits on your HSA and retirement plans (SEP IRA and 401K only, traditional IRAs &  Roth IRAs must be funded by April 15th) when you can afford it before the extended October deadline to reduce your taxable income