contributing to Roth or IRA

BDE16602 — Sat, 13 Mar 2021 23:52:18 GMT

Between my wife and I, we have a MAGI of a little more than $145k, she has a 401 via work and contributed 6% in 2020 and now upped to 10% for 2021. Turbo Tax tells me we don't get a "deduction" because we are over the MAGI limit for her contributions.

We also have a ROTH but not via our work. I currently owe Uncle Sam over $4k, If I add $7k to our Roth before April 15th, it reduces our amount owed to $2800.

Is this the best plan to reduce my amount owed for 2020 taxes or not. And what is the best plan for 2021, up my wife's deductions to her 401? Or something else.

Thanks for your help.

Re: contributing to Roth or IRA

DanaB27 — Sun, 14 Mar 2021 20:28:10 GMT

Yes, if you are able to contribute to a traditional IRA then you may be able to reduce your taxable income since traditional IRA contributions may be tax-deductible.

In your case you should be able to deduct the full $7,000 (assuming you are older than 50) since your MAGI is less than $196,000.

A traditional IRA contribution deduction is limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. Please see IRA deduction limits for details.

Please be aware contribution to a Roth IRA are never deductible.

Yes, your wife should continue to contribute to her 401k and then you can contribute to a traditional IRA in 2021. Please review IRA deduction limits for 2021.

topic contributing to Roth or IRA in Investing

contributing to Roth or IRA

Re: contributing to Roth or IRA