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IRA 2019 Contributions

jd114 — Thu, 04 Jun 2020 14:38:54 GMT

I postponed my tax bill payments so I could make contributions to my 2019 IRA with the intention of lowering my tax owed. But 2019 contributions in 2020 are not lowering what I owe for 2019. I thought it would. Even though submitting taxes until July is an option, Is it that I can't lower my liability by making contributions to 2019? Or should I be able to do that? It does lower if I make the direct contribution to 2019. But that is not the case since I'm making the contribution in 2020.

Re: IRA 2019 Contributions

macuser_22 — Thu, 04 Jun 2020 14:48:33 GMT

Only Traditional IRA contributions can be deducted, not Roth contributions.

If you are covered by a retirement plan at work and if you have a high MAGI then the deduction might be limited or eliminated. The last screen of the IRA contribution interview will tell you if that is the case.

The maximum IRA contributions for 2019 is $6,000, or $7,000 if you’re age 50 or older by the end of the year; or your taxable compensation for the year which ever is less.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, certain alimony and separate maintenance, and nontaxable combat pay ).

See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2018_publink1000230355

See this IRS link for Traditional IRA deduction limits when covered by a retirement plan at work.

https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits

Re: IRA 2019 Contributions

macuser_22 — Thu, 04 Jun 2020 14:54:39 GMT

@jd114 wrote:

It does lower if I make the direct contribution to 2019. But that is not the case since I'm making the contribution in 2020.

Be sure that you enter the amount in both boxes in the interview. It should be on line 19 of the 1040 schedule 1.