Are IRA Contributions Tax-Deductible?
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Are IRA contributions tax-deductible? Yes, IRA contributions may be tax-deductible if you qualify, and depending on the type of account you have. Contributions to a traditional IRA are deductible, while contributions to a Roth IRA are not.
» April 18, 2023, is the last day to file: Read our full list of federal income tax deadlines.
Here’s how to figure out if you qualify to deduct your traditional IRA contributions.
If you don't have a work retirement plan
If you, and your spouse if you’re married, don’t have a retirement plan at work, and you want to open a traditional IRA, you can do so. You may also qualify to claim an IRA tax deduction for the contributions you make.
You can contribute to your IRA through the tax filing deadline, April 18, 2023, this year. Keep in mind that you must have income from work to contribute to an IRA. (Spouses who don’t have their own income may be eligible for a spousal IRA.)
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If you do have a work retirement plan
If you do have a retirement plan at work, or if your spouse does, then your ability to deduct contributions depends on whether your income is above the traditional IRA income limits. (Note: These income limits usually change each year, due to IRS inflation adjustments.)
If your income is under the limits, you’re eligible to claim a tax deduction for your contributions to a traditional IRA.
If you’re in the income phase-out range, you can deduct a portion of your contributions.
If your income is higher than the maximum income limit ($78,000 in tax year 2022 if you are single, and $129,000 if you are married filing jointly), then you can’t deduct your IRA contributions.
» Check out the traditional IRA income limits
Even if you can’t deduct your IRA contributions, you can still make contributions to that account. With a nondeductible IRA, you don’t get to claim an immediate tax deduction, but your money grows tax-deferred. When it comes time to withdraw your money in retirement, you’ll owe taxes on the investment earnings in a nondeductible IRA, but not on the money you contributed, assuming you follow the IRA withdrawal rules.
Keep in mind that the annual maximum contribution of $6,000 in tax year 2022 ($7,000 if you're 50 or older) applies to your traditional and Roth IRAs, combined if you have both. In 2023, the contribution limits rise to $6,500 ($7,500 if age 50 and older).
» See our complete roundup of the best IRA accounts
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