Solutions 4 Financial Independence: 05/04/17

Cydney Cooper Question: "I will be receiving my quarterly bonus soon and filed an extension on my taxes so I can make my 2016 IRA contributions. I assume I can still do this since I filed an extension, is this correct?"

Answer: (John Halterman, Beacon Wealth Management) "You're not going to like my answer. The IRS allows you to file extensions so that you can get your tax returns completed. But that does not mean that they will allow you to make IRA contributions after the April 15th date.

"You have up to April 15th of the tax year to make prior year contributions. So great intentions, but unfortunately you can't make that.

"Here's another caveat that you probably should be well aware of. A lot of times people think well I'll make my contribution to lower my tax burden. The IRS also requires you to pay the money you owe even though you filed the extension. The extension basically allows you to file later, but any money owed you needed to pay by April 15th.

"I don't mean to be the bearer of bad news, but that's something critical that you should know."