Are you short of cash for an IRA contribution this year? The IRS may give you a “loan”.
Planning strategy: Use your federal income tax refund to fund your IRA contribution. Simply file your 2011 return early, claiming a deduction for the amount you intend to contribute (assuming you are allowed to make a deductible contribution). When you receive the refund, use it to help fund the IRA contribution you deducted on your return.
Is it legal? Absolutely. The IRS approved this taxpayer-friendly technique years ago (IRS Revenue Ruling 84-18). All you have to do is make the IRA deposit by the April 17 deadline.
The IRA contribution limit for the 2011 tax year is $5,000 ($6,000 if age 50 or older).
Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.