Looking for a last minute tax deduction for your 2007 income taxes? The best idea might be a contribution to your regular IRA.

The IRS allows individuals and married couples to contribute up to $4,000 to their IRAs through April 15 and allows them to count that contribution in the previous tax year's filing. For married couples, the maximum amount is $8,000.

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Taxpayers over the age of 50 can deduct an extra $1,000 per person as a retirement “catch up.”

“It’s the only deduction I can think of that you can do after the year has ended,” said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.

The deduction is taken either on Form 1040 on line 32, or on Form 1040-A line 17. Do not file income tax form 1040-EZ if you wish to take the IRA deduction.

Some rules apply to qualify for the full deduction. For a single filing taxpayer currently participating in a retirement plan like a 401(k) or a pension plan, the income limit is $52,000. For married couples, its $83,000. After those limits, the deduction decreases as your income increases.

There is no requirement that taxpayers have an existing IRA. If you have $4,000 sitting in a savings account, you can open an IRA and seek the deduction. 

In order to qualify, taxpayers must write a check or deposit the money with their financial institution before April 15, and make sure the IRA money is marked for last year’s contribution, said Jeremy Welther, a certified financial planner with Brinton Eaton Wealth Advisors.

The best way to do this is to write “2007” on the check you deposit with your broker or financial planner.

People who don’t have a financial planner can call a big name financial custodian like Fidelity or Vanguard and contact their retirement service units. That will help ensure the money is both going toward  2007 IRA contributions and that it's taxable.

Remember, an IRA is a retirement account, and it does carry a 10% penalty if a taxpayer withdraws money from the account before the 55 1/2 age limit with some exceptions.

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