Hi dd9253,
Thanks for the question. The question you ask is really a personal choice. It will take less cash to simply pay the tax. However, if your goal is to pay less tax and to not pay or reduce any associated estimated tax penalties, by all means make an IRA contribution.
If you are in a 12% marginal tax bracket, $10,000 in deductible IRAs will only save $1,200 (22% rate would save $2,200). You could make an estimated tax payment before 1/15/23 to help a little. I would urge to consider the following things:
- Do you have earned income of at least $10,000?
- Do you have the cash flow to tie up that much money?
- If you need the cash in 2023, a withdrawal will be taxable.
I hope this helps, please ask any additional questions you need.
