An IRA contribution is a deduction in calculating taxable income, it is not a tax credit. The tax savings is the amount of your contribution X your tax rate.
Use the Turbo Tax software to do the analysis.
To see what an IRA contribution may do for your tax situation, enter a contribution in Turbo Tax. Before you enter the information note what your refund or amount due is. Then, compare the amount to what the program calculates after you enter a contribution to an IRA.
If you are not happy with the results, you can delete the contribution.
Contributions to an IRA are handled in Deductions and Credits:
• Select Federal Taxes
• Select Deductions and Credits
• Select Show More at Retirement and Investment
• Select Start at Traditional and Roth IRA contributions
To delete the contribution:
• Select Federal Taxes
• Select Deductions and Credits
• Select Show More at Retirement and Investment
• Select Revisit at Traditional and Roth IRA contributions
• Deselect the Traditional IRA contribution
• Select Yes to Remove the IRA Contribution
You can open and make contributions to a traditional IRA if you (or, if you file a joint return, your spouse) received taxable compensation during the year, and you were not age 70½ by the end of the year.
The maximum contribution to a Traditional IRA is $5,500 ($6,500 if over age 50). If filing a married filing jointly tax return these amounts are per person.
If you are covered by a retirement plan through work, your deduction may be limited (see Chart below).
