topic If I deposit our 14K into an IRA, does it give me that much back in taxes? or does it just lower my tax income bracket and I may just owe less? in Retirement tax questions

If I deposit our 14K into an IRA, does it give me that much back in taxes? or does it just lower my tax income bracket and I may just owe less?

rutht — Wed, 24 Mar 2021 00:51:20 GMT

Looking to get more money back on taxes.
paying now $3,571.00 to IRS If I deposit will I get 14,000 less the amount I owe?

Re: If I deposit our 14K into an IRA, does it give me that much back in taxes? or does it just lower my tax income bracket and I may just owe less?

macuser_22 — Wed, 24 Mar 2021 01:03:28 GMT

The maximum 2020 IRA contribution is $6000 ($7000 of over age 50) and must be from earned compensation.

If a Traditional IRA and yiu qualify for a deduction then it will reduce your taxable income by that amount (not the tax). The tax reduction depends on total income and your margional tax rate.

For example if you are in the 24% tax bracket then a $6,000 contribution can be a $1,440 reduction.

Re: If I deposit our 14K into an IRA, does it give me that much back in taxes? or does it just lo...

MaryK4 — Wed, 24 Mar 2021 01:07:26 GMT

It is an Adjustment to income- which means for every dollar you contribute, your taxable income will be reduced. However, there are limits on the amount you can contribute.

If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: 6,000 ($7,000 if you are age 50 or older), or 100% of your compensation.