- Days left

The Early Tax Deadline You Can't Afford to Miss

IRA tax deadline retirement savings
For millions of taxpayers, the April 15 deadline to file your 2012 return already looms large. But for a select group of retirement savers, there's a deadline coming even sooner -- and missing it could cost you a huge amount of money.

That select group includes those who have money in traditional IRAs and 401(k) accounts and who turned age 70½ during 2012.

Under what's known as the required minimum distribution or RMD rules, you have until April 1 of the following year to make your first required withdrawal. In subsequent years, you need to take money out of your account by Dec. 31 to cover that year's RMD.

What If You Don't Need the Money?
The laws governing RMDs aren't really based on need. Rather, they reflect the idea that IRAs and 401(k)s were made to encourage retirement savings rather than as a tax shelter for money to eventually go to heirs. The RMD rules make sure that retirees have to withdraw -- and include in taxable income -- part of their retirement accounts every year.

The only exception to the RMD rule governs 401(k)s. If you're still working, you don't have to take 401(k) RMDs until you retire. IRAs, though, don't have that exception, so even if you're still working, you have to take a withdrawal from your IRAs.

How Much Do You Need to Take Out?
Calculating the amount of your RMD is somewhat complicated, although the IRS provides help with worksheets and tables. The basic idea, though, is that you must take withdrawals based on your life expectancy.

So for instance, if you were still age 70 at the end of 2012, you would take your IRA balance as of the end of 2011 and then divide it by your life expectancy of 27.4 years. The resulting dollar amount would be your RMD for the 2012 tax year, which you'd need to take out by April 1.

What About Roth IRAs?
Unlike traditional IRAs, Roth IRAs aren't subject to the RMD rules. As a result, you never have to withdraw from a Roth IRA if you don't want to.

What Happens If You Don't Take Your RMD?
The penalties that the IRS imposes for failing to take a required minimum distribution are harsh. The IRS calculates how much you should have withdrawn and then charges a 50 percent excise tax as a penalty.

Get more information about required minimum distributions from this link to the IRS website.

Increase your money and finance knowledge from home

TurboTax Articles

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Tax Tips for Uber, Lyft, Sidecar and other Car Sharing Drivers

When you're a driver for a ride-sharing company such as Uber, Lyft, Sidecar, or other car sharing service, the most important thing to understand about your taxes is that you are probably not an employee of Uber, Lyft or Sidecar. Drivers for these companies are usually independent contractors, a fact that has tax implications, both at filing time and year-round.