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Fund IRA with Refund


Lion EA

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Did I mess up? Son's girlfriend likes to contribute to her IRA with part of her refund using Form 8888 or whatever that is that splits her refund into more than one account. We've been doing this for some time. I've had her near the bottom of my much too high stack of returns to prepare. Did I wait too long? Where can I read the last date to e-file her return and still do what she wants? Help me keep my family happy!

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Get it filed now and it should, hopefully, make it in time. But if in doubt, have her full refund come to her regular bank account, and warn her that if it is not deposited in time, she needs to make the deposit herself, on the 14th or 15th.

kc - I agree that you MAY fund the IRA with your refund. However, as a policy, I strongly recommend that the IRA exist before the return is sent. I am just not comfortable that all this could apply to will remember or be able to follow up.

z

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Well, I agree that as a general rule, I like to know that they have funded it. BUT, when they fund it with a direct deposit to the IRA by using form 8888, that is the same thing, for all extents and purposes, as long as it is filed early enough to avoid any timing problems. And as long as I know that they do not have any IRS or other debt problems. I'm pretty usre that is the case here.

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kc - I agree that you MAY fund the IRA with your refund. However, as a policy, I strongly recommend that the IRA exist before the return is sent. I am just not comfortable that all this could apply to will remember or be able to follow up.

z

A much better way to do it would be to fund the 2008 IRA separately, and use the 2008 refund to fund the 2009 IRA contribution directly. Then all the 4/15 deadline hoo-ha goes away. And if you can't manage to get ahead that once, "skip" a year's contribution. If the money goes in on the same day, does it ultimately matter what year you _called_ it? It may mean no tax deduction that one year, and that will make a difference to some folks. But just once!

Catherine

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