I always feel on edge between January 1st and April 15th. It is tax purgatory. The previous year is over, but you now get to face Uncle Sam and his minions. I don’t like the feeling of owing anyone anything, but owing money to Uncle Sam is a normal occurrence. Owing money to Uncle Sam at tax time is not necessarily a bad thing. Well, as long as you still have the money to pay.
The one interesting part about this time of year is the IRA rules. As long as you qualify for a contribution, you can make your 2007 and 2008 contributions between Jan 1 and Apr 15. That means that if you are under 50 then you can contribute $4,000 for 2007 and $5,000 for 2008. If you are above 50, then you can contribute $5,000 for 2007 and $6,000 for 2008. The best way to contribute to any investment is to contribute regularly on a monthly basis. But if you have neglected to invest on monthly basis, then make sure you still make a lump sum contribution. It will certainly make the tax time blues go away.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.