It’s Not Too Late To Cut Your Taxes By Opening An IRA

Gail MarksJarvis

Chicago Tribune

WWR Article Summary (tl;dr) The economic empowerment of women is one of our top priorities here at WWR which is why we want to make sure you KNOW there is still time for you to lower your taxes before tax day!  You can open an IRA with $100, or even less. Yet the larger your contribution, the larger your deduction. Assume you are in the 25 percent tax bracket and put $4,000 into an IRA for 2015. That will entitle you to a $1,000 deduction. You multiply $4,000 by 25 percent.

Chicago Tribune

There’s still time to cut your taxes before turning in your 2015 tax return April 18.

You can open an IRA and get a tax deduction. In addition, that IRA will help move you to where most Americans need to be, making more progress accumulating the money they need for retirement.

To get a deduction, open a traditional deductible IRA. For the maximum deduction, put $5,500 into an IRA if you are under 50 and $6,500 if you are 50 or older. If you have a small business, you can save even more in a SEP IRA and enhance your deduction, but the amount depends on the income you’ve earned in the business.

But keep in mind, while $5,500 and $6,500 are the maximum contributions for individuals, you don’t need to commit that much if it’s more than you can handle. You can open an IRA with $100, or even less. Yet the larger your contribution, the larger your deduction. Assume you are in the 25 percent tax bracket and put $4,000 into an IRA for 2015. That will entitle you to a $1,000 deduction. You multiply $4,000 by 25 percent.

Individuals can open deductible IRAs, regardless of their income, if they have no retirement plan at work, such as a 401(k). But even those with workplace plans will be able to open an IRA and use it for a tax deduction if their income is low enough. The cutoff is a modified adjusted gross income of $71,000 for individuals and $118,000 for couples.

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