Retirement planning includes tax planning. It’s important you understand how to use IRA contributions and distributions to help clients tax plan. This knowledge allows you to minimize clients’ tax liabilities and ensure compliance with IRS regulations, making it essential for any well-rounded tax pro managing clients’ retirement savings.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: For the backdoor Roth, does the rollover have to be in the same year?
A: No, however, if there are earnings, then part of the rolled-over amount will be taxable.
Q: Are children required to have earned income to contribute to a Roth IRA?
A: Yes, anyone who wants to contribute to an IRA or Roth IRA must have earned income.
Q: Are qualified charitable deductions (QCDs) deductible on Schedule A?
A: No, they are not deductible since the required minimum distribution (RMD) used as the QCD is not included in income.
Q: Is Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship), and Schedule F (Form 1040), Profit or Loss From Farming, income considered earned income for IRA purposes?
A: Yes, self-employment income is considered earned income.
To learn more about IRAs, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.