Only contributions to
a traditional IRA can be deducted on your return. For 2016 the
most that can be contributed to a traditional IRA is the smaller of:
- $5,500 ($6,500 if you are age 50
or older); or
- your taxable compensation.
Contributions to a traditional IRA are a deduction from your taxable. If you contributed the maximum of $5,500 AND you were in the 25% tax bracket, your potential tax savings would be $1,375. You would not be able to eliminate $3,300 in taxes unless you were in the 60% tax bracket! This bracket doesn't exist--the highest tax bracket is 39.6%
You are eligible to
contribute to an IRA, regardless of whether you are covered by an
employer plan at work, as long as you have earned income and are under age
70-1/2. If you are covered by an employer plan at work the
deductions for the contribution may be lower. Don't worry --
TurboTax will calculate the deduction for you.
To enter
contributions to a Traditional IRA in TurboTax, please follow these steps:
- Click on Federal Taxes >
Deductions & Credits [In TT Self-Employed:
Personal > Deductions & Credits > I'll choose what
I work on].
- Scroll down to the Retirement
and Investments section and click on the Start/Revisit box next
to Traditional and Roth IRA Contributions. [See Screenshot
#1, below.]
- On the Traditional IRA and Roth
IRA screen, mark the box for Traditional IRA and click Continue.
[Screenshot #2]
- On the screen, Did you
Contribute to a Traditional IRA? click the Yes box.
[Screenshot #3]
- Click the appropriate box on Is
This a Repayment of a Retirement Distribution? [Screenshot #4]
- On the Tell Us How Much You
Contributed screen, enter the amount of your contribution and click Continue.
[Screenshot #5]
- Continue through the screens, entering
the requested information.
For more details on
IRAs, please see the following IRS Publications:
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