I have a tax bill for 2020, can I invest in a traditional IRA to reduce the amount? Is there criteria I need to meet?

[MountainG]

I have a tax bill for 2020, and I'm researching ways to reduce it.  Can I invest in a traditional IRA to reduce the amount? Is there criteria that needs to be met and how much would it reduce the amount owed?  

[fanfare]

it's crunch time to make an IRA contribution which must be in your account by May 17th.

you'd have to visit a branch office Monday, Bring a checkbook.

first, make sure you are eligible for a deductible contribution to an IRA.

[ColeenD3]

or any Traditional IRA deduction, you must have earned income. If you do, there are a couple of possibilities. If you (and/or your jointly-filing spouse) didn't contribute to an employer-sponsored or self-employed retirement plan like a 401(k), your entire Traditional IRA contribution is deductible.

But if you (and/or your jointly-filing spouse) did contribute to an employer-sponsored or self-employed retirement plan in 2020, the amount you can deduct depends on your tax filing status and modified adjusted gross income (MAGI).

If your MAGI is:

• Below the phase-out range-your entire contribution is deductible.
• Above the phase-out range-you can't deduct anything.
• Within the phase-out range-you can make a partial deduction (we'll calculate this for you).

Here are the MAGI phase-out ranges for tax year 2020 if you were covered by a retirement plan at work:

• Single, head of household, or married filing separately (not living with spouse): The phase-out range is $65,000 – $75,000
• Married filing jointly or qualified widow(er): The phase-out range is $104,000 – $124,000
• Married filing separately (living with spouse): The phase-out range is $0 – $10,000

If you weren't covered by another retirement plan at work, but your spouse was, and you're:

• Filing jointly, the phase-out range is $196,000 – $206,000
• Filing separately, the phase-out range is $0 – $10,000