After seeing that I owed federal taxes this year I made a decision to make a 5K contribution to my Roth IRA. My Federal Tax due amount did not change. Should it have?
02297
2 Replies
RaifH
Expert Alumni
Feb 9, 2022 8:47:01 AM
No, it should not have changed your tax due unless you are eligible for the Saver's Credit. Since a Roth IRA is funded with after-tax dollars, it does not change your taxable income for this year. If you wanted to lower your taxes this year, you would contribute to a traditional IRA and your contribution would reduce your taxable income. For more information, see the differences between a Roth and a Traditional IRA here.
fanfare
Level 15
Feb 9, 2022 6:23:17 PM
you still have time to recharacterize the Roth contribution to a Traditional contribution.
Or withdraw it altogether.
BUT
first make sure you are eligible for a full deduction of that amount.