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If I owe federal taxes because I didn't withhold enough in 2023, is it too late to deposit to a retirement plan like IRA or 401K to try and decrease the amount due?

 
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2 Replies
TomK2023
Expert Alumni

If I owe federal taxes because I didn't withhold enough in 2023, is it too late to deposit to a retirement plan like IRA or 401K to try and decrease the amount due?

Yes.  If you haven’t already funded your retirement account for 2023, you have until the tax return filing due date to do so (April 15, 2024). That’s the deadline for contributions to a traditional IRA, deductible or not, and to a Roth IRA.

 

If you have a Solo 401k, Keogh or SEP and you get a filing extension to October 15, 2024, you can wait until then to put 2023 contributions into those accounts.

 

Making a deductible contribution will help you lower your tax bill this year. 

 

Please see this TurboTax article for more information: Tax Tips After January 1, 2024

 

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If I owe federal taxes because I didn't withhold enough in 2023, is it too late to deposit to a retirement plan like IRA or 401K to try and decrease the amount due?

Of course, no one knows if you are actually eligible for contributing to a "deductible'"  IRA.

That depends on other factors. 

Remember that the tax deduction is NOT 1:1, 

i.e, if your income for the year puts you in the 10% tax bracket, a $6000 contribution to an IRA would reduce your taxes due by only $600.  If you are in a higher tax bracket, then more.

 

And if you only have access to a traditional 401k thru your W-2 employer, then it's too late to contribute more there.

____________*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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