How exactly does an IRA help me.

[joshmann117]

Lets say i owe $1,000 in federal and state combined.
If I open an IRA and put $1,000 in it. Will that deduct $1,000 from my taxes making me not owe to taxes?

[jerry2000]

An IRA contribution does not reduce your tax dollar for dollar. A deductible contribution made to a Traditional IRA reduces your tax by the amount of the contribution times your marginal tax rate. For example, if you are in the 25% marginal tax rate bracket, a $1,000 deductible contribution to a Traditional IRA would reduce your tax by $1,000 X .25 = $250.

A contribution to a ROTH IRA or a non-deductible contribution to a Traditional IRA is not deductible and would not reduce your tax.