I'm using TurboTax Home and Business and I'm near the end. I'm at that part where TurboTax asks if I want to make a last minute contribution to a traditional IRA in order to reduce out taxable income for 2020, and there is that cool calculator that lets you explore how different contributions affect tax owed.
I receive a W-2 from my employer. My spouse in self-employed, and has a sole-proprietorship.
I noticed that IRA contributions under my name have relatively little affect on our taxes owed; contributions to my spouse's IRA seem to be twice as efficient at reducing our tax liability.
What is the reason for the difference? I thought the IRS basically saw us as a single taxpaying entity but evidently that is not the case. Why are contributions to my spouse's traditional IRA nearly twice as effective at reducing our tax liability?
