How exactly does an IRA help me.

joshmann117 — Sat, 01 Jun 2019 04:13:49 GMT

Lets say i owe $1,000 in federal and state combined.
If I open an IRA and put $1,000 in it. Will that deduct $1,000 from my taxes making me not owe to taxes?

An IRA contribution does not reduce your tax dollar for d...

jerry2000 — Sat, 01 Jun 2019 04:13:50 GMT

An IRA contribution does not reduce your tax dollar for dollar. A deductible contribution made to a Traditional IRA reduces your tax by the amount of the contribution times your marginal tax rate. For example, if you are in the 25% marginal tax rate bracket, a $1,000 deductible contribution to a Traditional IRA would reduce your tax by $1,000 X .25 = $250.

A contribution to a ROTH IRA or a non-deductible contribution to a Traditional IRA is not deductible and would not reduce your tax.

topic How exactly does an IRA help me. in Retirement tax questions

How exactly does an IRA help me.

An IRA contribution does not reduce your tax dollar for d...