Question about deducting an IRA contribution

Forum|Forum|7 years ago
June 6, 2019
1 reply
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The program said that I could get a deduction for contributing to a Roth IRA. I currently have a Roth IRA, if I make the contribution right now, will that count towards this current tax filing? And will that deduction be in the amount that I contribute. For instance, if I contribute $5000, would that directly reduce the current amount it is reporting I owe in the same amount?

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Anonymous

Roth IRA contributions are not deductible (though they do factor into the Retirement Saver's Credit, if applicable). Traditional IRA contributions are deductible.

If you open a Traditional IRA and make a contribution, then you can get a deduction (assuming you're eligible). That may be a viable option for you, and it would lower your taxable income. You can take that deduction now, when you file the 2016 return, as long as you contribute by April 18.

The max contribution is $5500 ($6500 if age 50+). But that annual limit is a combined limit for all IRAs that you have, including the Roth.

The reason IRS doesn't allow a deduction for contributing to your Roth IRA is because it's an "after-tax" vehicle, meaning your benefit comes later on in your life, when you retire and start taking the money out tax-free.

Here's a link to IRS publication 590-A which discusses Traditional & Roth IRA contributions & eligibility: https://www.irs.gov/pub/irs-pdf/p590a.pdf