I am proud to say that I have had an IRA since my mid twenties. And of course, it laid dormant for several years until my early thirties. Every now and then, I rolled over an old 401k from a former employer into it, a few hundred here, a thousand there. Then, in 2015, I exercised my American right to file taxes (sense the sarcasm there?), and discovered that my hubby and I owed $350 for 2014.
Up until that point, I never owed any taxes, and always got a refund. Using my knowledge about taxes, I decided that I wasn’t going to kiss away $350 to the IRS, and that the hubby and I would make our first real contribution to our IRAs to eliminate the taxes owed. We contributed $2,200 ($1,100 each) to my IRA, bringing the balance to $4,558.54.
That not only eliminated the $350 to the IRS, but also got us a $349 refund, $3 from the IRS and $346 from NY.
A year later, I got an early start to our taxes in February 2016. But as soon as I saw that we owed $1191 to the IRS, I cursed the Affordable Care Act, put our taxes down, and ignored them until April.
The week before they were due, I realized I was about to become the accountant that needed to get an extension on her own taxes, so I picked them back up and finished them.
To reduce the taxes owed from $1191 to $426, my hubby and I had to contribute $2,250 each to our IRAs. We also got $622 back from the state.
I basically contribute to my IRA once a year, as a way to not pay additional taxes. At the moment, my savings account is at an all time low of $2,100, thanks to some irregular medical expenses, and the $2,250 contribution to my IRA. But when I logged into my IRA account this month, it felt great to see a $6,332.72 balance. And then I was over the moon when I saw my hubby’s IRA balance has an additional $6,008.11.
I may even attempt to meet the IRA contribution limit of $5,500 this year. Maybe $2,000 this year, and the remaining $3,500 by April 15 next year.