Example. You file on March 21st, 2008 for tax year 2007, if you decide to send in a check for your Roth IRA in the amount of $4000 on April 1st, technically, you missed the deadline by filing your taxes in March. Therefore the funds submitted would be for tax year 2008.

With that said, the onus is on the taxpayer to make this distinction. E-Trade, sharebuilder or whomever will not have the info of when you submitted your own taxes and will take the monies based on what you tell them. If you get audited, this type of thang could come up.

The best bet for folks who send in $100 buck here and there, is to bite the bullet one year and get ahead. You could be done contributing for tax year 2007 IN 2007 and give yourself a few months in 2007 to build up some monies to be sent in on January 1st, 2008 to get ahead for tax year 2008.

“Yes, yes, I know that receiving a tax refund means that you gave the government an interest free loan, but if you get one, you might as well do something smart with it. And in some cases, this sort of ‘enforced’ saving is necessary to get people to set a little aside.”

I agree that it is not the best idea, but there are many people who do not necessarily have the discipline to save. This strategy will be easier, as they really can’t touch the money until they get a refund.

Personally, I lower my tax withholdings as low as I possibly can without setting off flags with the IRS. If you have over 9 exemptions, the IRS has you flagged in the system. Since I have three kids, and I am the sole wage earner, I get many exemptions, but I only claim up to 9 for my withholdings. So, I still get a nice chunk back at the end of the year.