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rebeccagjohnson
New Member

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

 
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macuser_22
Level 15

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

Answered in comments.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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6 Replies
SweetieJean
Level 15

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

Do you have any self-employment income?
SweetieJean
Level 15

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

rebeccagjohnson
New Member

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

No self emp income and I had health care all year at my job
macuser_22
Level 15

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

A deducible IRA does not mean you will not owe tax. The $3,000 deduction reduces your taxable income, not the tax. If you are in the 15% tax bracket (meaning that 15% of your taxable income is taxed) the a $3,000 reduction in income would reduce the tax by about 15% of that ($3,000 x .15 = $450). Or are you saying that you are getting a penalty because the $3,000 is an excess contribution.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
rebeccagjohnson
New Member

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

Thank you, that was the answer I was seeking.
macuser_22
Level 15

If I put $3000 in a Traditional IRA, and all $3000 is deductible, why do I still owe federal taxes? My income is below the threshold & I'm filing as single.

Answered in comments.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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