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janehinman
New Member

Can I still put money in an IRA to defer taxes for 2019? I owe $502 & $644 fed/state. Would the credit go toward both of these? Thanks!

 
2 Replies
SusanY1
Expert Alumni

Can I still put money in an IRA to defer taxes for 2019? I owe $502 & $644 fed/state. Would the credit go toward both of these? Thanks!

Yes, if you otherwise qualify you can still put money in a Traditional IRA (through 7/15/2020 for the 2019 tax year) and deduct this on your tax return. 


It will reduce federal tax and in most states the state tax due as well, although there are exceptions to the latter. 

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SteamTrain
Level 15

Can I still put money in an IRA to defer taxes for 2019? I owe $502 & $644 fed/state. Would the credit go toward both of these? Thanks!

The "BUT" to all this is to remember that is is not a "Credit"...it is an income deduction.

 

So it depends on what tax bracket you are already (in the middle) of for Feds and State.  So if your current income level  is otherwise in the ~22% tax bracket, you'd need a somewhat over 2200 contribution to a deductible IRA to reduce your Federal tax bill by $500.....(assuming  you  are eligible to make a deducible IRA contribution).   IF your income puts you in a lower tax bracket, the effect would be lower too.

 

Since a generic state tax rate is ~5%, that 2200 contribution would only reduce state taxes by $110....but state tax rates vary a lot..so could be somewhat more, or a lot less.

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
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