How IRA deduction rules apply
Counting your IRA contributions as tax deductions depends on the type of IRA you invest in, the retirement plan your employer offers, and your income.
Counting your IRA contributions as tax deductions depends on the type of IRA you invest in, the retirement plan your employer offers, and your income.
Contributions are never tax-deductible.
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You may be able to save even more with a SEP-IRA or SIMPLE IRA.
An amount used to determine a taxpayer's IRA eligibility. Generally, it's the taxpayer's adjusted gross income calculated without certain deductions and exclusions.
Deductions vary according to your modified adjusted gross income (MAGI) and whether or not you're covered by a retirement plan at work.
If you (and your spouse, if applicable) aren't covered by an employer retirement plan, your traditional IRA contributions are fully tax-deductible.
If you (or your spouse, if applicable) are covered by an employer retirement plan, you can still make contributions to a traditional IRA, but depending on your income, they may qualify as partially tax-deductible or totally non-tax-deductible IRA contributions.
Details are provided at irs.gov:
If you are covered by a retirement plan at work
If you aren't covered by a retirement plan at work
If you are covered by a retirement plan at work
If you aren't covered by a retirement plan at work
The limits on the amount you can deduct don't affect the annual amount you can contribute. However, you can never claim a tax deduction for more than what you contributed to your IRA that year.
Get details on contribution limits & deadlines
Keep in mind that whether or not your contribution is tax-deductible shouldn't be the only consideration in choosing an IRA. Before deciding, you should also weigh in on factors like required minimum distributions (RMDs) and taxes on withdrawals.
Annual withdrawals required by the IRS from certain retirement accounts, beginning at age 73*. RMDs are intended to ensure that the assets in these types of accounts are eventually subject to taxation.
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