Last minute IRA contribution... should we?

Forum|Forum|4 years ago
April 3, 2022
2 replies
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Married filed jointly

No dependents

Owe $4500

Claim standard deduction

Wife contributes to a Simple IRA monthly ($7200 this year) at her firm. Rolls it once a year to a Traditional IRA. Is this considered "recharitarize"?

Would it be wise to make a contribution to her Traditional IRA before April 18th.... making sure it is for 2021. Or either of us open a Roth IRA? I am 50 so could do $7K from what I understand.

Have the funds to help reduce out tax liability just not sure how to best go about this.

Not A Product Question

KrisD15

Level 15

"Wife contributes to a Simple IRA monthly ($7200 this year) at her firm. Rolls it once a year to a Traditional IRA. Is this considered "recharitarize"?"

No, it is a "rollover" or "conversion" not a recharacterization"

A ROTH IRA is not deductible, but a contribution to a traditional IRA might be.

You can go to Deductions & Credits

Retirement and Investments

Traditional and Roth IRA Contributions

Select that you will be contributing to a traditional IRA in 2022 for 2021 and the amount.

The program will make the calculation and let you know if it would be benefitable.

If not, go back and delete that entry.

If yes, be sure to make that contribution by April 18th.

(some banks have a day delay so don't be late)

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Mike9241

Level 15

Is this considered "recharacterize"? no. recharacterize is when a traditional IRA is transferred to a Roth or vice versa

a Roth contribution will not lower your taxes since it is not deductible

your spouse may contribute to an IRA but it could be limited since she is covered by an employer plan.

there is the spousal IRA rule that provided a joint return is filed, the lower-earning spouse (even if no earned income) can consider the other's compensation to the extent it has not been taken into account in making an IRA contribution for the higher-earning spouse. this too is subject to phaseout

there are worksheets in this IRS pub to help you figure what you can deduct

https://www.irs.gov/pub/irs-pdf/p590a.pdf