It says if I open an IRA account right now I can qualify for up to $5500 tax credit on this year's tax return. How does that work?

[sweetfamily2001]

How big of a contribution will I need to make right from the start? Will my first contribution affect the amount of tax credit I'll get? How do I know how big will be my tax credit?

[Texas Roger]

To clarify a few things, the IRA contribution is not a tax credit. It is an adjustment to income that lowers your AGI and may lower the amount of income that is taxable and that you must pay tax on. If you are in the 10% tax bracket, for example, a $5500 IRA contribution could reduce your taxes by $550. You can enter the amount you think you want to contribute to see what affect it has on your taxes. Make sure and delete it before you file your return if you decide not to make the contribution.

To be a deduction on your 2016 tax return, all of the contributions must be made by April 18, 2017 and they must be designated as a contribution for tax year 2016. You must enter the total amount you expect to contribute on your tax return before you file it. Some tax payers enter the contribution they plan to make, file the return and then use the refund they get to make the contribution. There is a risk to doing that if for some reason you don't get all of the refund shown on your tax return.