Starting an IRA now. I saw something pop us saying that if I open up an IRA now it could deduct 5500 from my taxable income..?? Please explain.

[kjhollander45]

How much do I need to start and IRA to get the credit?  Do you think it is worth it.

Thaks

[Opus 17]

If you don't have an  IRA and are eligible to open one, or if you have one but haven't maxed out your contributions for 2016, you can make contributions up until April 18, 2017 and have them counted as 2016 tax deductions. 

For every $1000 you deposit, you will save between $150 and $280 on your tax return.  Either getting a larger refund or reducing your tax owed.  But you will have $1000 less in your bank account to use for whatever you were saving it for.  And once you put money into an IRA, there are lots of rules and penalties for when you can take it out.

IRAs are a great retirement planning tool. But they are not just a simple way of increasing your refund.  There is a lot to consider.