There are 441 new reasons taxpayers will seek advice this year. Among the hundreds of new tax law changes are higher limits on IRA contributions and the new saver's tax credit. Now both traditional and Roth IRAs will give taxpayers more flexibility in planning their retirement savings.
Previously, the most you could contribute to an IRA in one year was $2,000. However, the arrival of 2002 brought a higher limit: $3,000. It will jump to $4,000 in 2005, and to $5,000 in 2008. There's even more good news for people over 50. They can contribute an additional $500 over each limit beginning in 2002 and continuing through 2005. The tax change also offers some people (single income filers with income below $25,000, or $50,000 if married filing jointly) a nonrefundable credit for contributions to IRA or pension plans.
The higher allowances make saving for retirement easier, and at least one financial services company has made establishing an IRA even simpler. With H&R Block's new Express IRA, you can open and fund an IRA using part or all of your tax refund. That's especially useful for the many Americans who aren't building their retirement accounts yet. According to the Investment Company Institute, more than 60 percent of U.S. households don't have an IRA.
"For many Americans, the annual meeting with their tax advisors is the one time each year they think about their finances," said Kathy Burlison, a tax advisor at H&R Block Inc. "We want to help people plan for their futures by offering both tax and financial services."
The H&R Block Express IRA can be set up as either a traditional or Roth IRA and opened for as little as $300-one of the lowest requirements in the financial services industry. Participants also have the option of regularly contributing to their IRA for as little as $25 a month, or $75 a quarter via direct deposit from their checking or savings accounts, or they can mail in their contributions. While a traditional IRA is used for retirement savings, a Roth IRA can be withdrawn early and without a tax penalty to help buy a home or finance an education.
Another important tax change, the new saver's credit, offers taxpayers an additional reason to invest in an IRA. Effective in 2002, the saver's credit provides taxpayers a credit of up to 50 percent of their IRA contribution, depending on their filing status and adjusted gross income.
"That's a credit many Americans should take advantage of," Burlison said. "Saving for your future-and taking advantage of a valuable tax credit-is now easier than ever."
For more information about the new tax changes and how you may be affected, visit www.hrblock.com
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