You will be able to offset part of the premium tax credit repayment, but you will not be able to offset it all with an IRA contribution.
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. 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.
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.
If you are covered by a retirement plan through work, your deduction may be limited (see Chart below).
