Hi, my wife and I have a total income of 160,900. We need to be under 160,000 to qualify for the student loan interest payment credit. Can we place 1,000 in an IRA now in order to lower our taxable income? If so, how would we make changes in our filing to reflect this? Thanks!
In theory you can do this, but keep in mind that for married filing joint returns, the student loan interest deduction begins to phase out at $130k, so even if you got your AGI down to $159k, the deduction would be minimal.
The other wrinkle is that the IRA deduction may not lower you AGI:
IRA deductibility - covered by employer plan
IRA
deductibility - NOT covered by employer plan
If you haven't finished yet, you can do the "what-if analysis" at:
Deductions and Credits > Retirement and Investments > Traditional and Roth IRA Contributions
In theory you can do this, but keep in mind that for married filing joint returns, the student loan interest deduction begins to phase out at $130k, so even if you got your AGI down to $159k, the deduction would be minimal.
The other wrinkle is that the IRA deduction may not lower you AGI:
IRA deductibility - covered by employer plan
IRA
deductibility - NOT covered by employer plan
If you haven't finished yet, you can do the "what-if analysis" at:
Deductions and Credits > Retirement and Investments > Traditional and Roth IRA Contributions