The Johnsons Calculate Their Income Taxes the last part of 6

Business & Finance
Tutor: None Selected Time limit: 1 Day

9. List three additional ways that the Johnsons might reduce their tax liability next year.

Jan 10th, 2015

Reduce Your Tax Liability with IRA Contributions

Most taxpayers crack a smile during tax season because they know that they're getting a refund. Theaverage tax refund last year was a whopping three thousand dollars, which is enough to make anyone smile. If you're one of the few people who will owe this year and want to soften the blow a little bit, here's one of the few things you can do to reduce your tax liability—make a contribution to a Traditional IRA.

How much you save will depend on your tax bracket. One caveat, before you make any decisions, consult with a tax professional. Your situation may have wrinkles we don't cover and the last thing I want you to do is make a mistake that costs you money. A tax professional will be able to sit down with you, map out your situation, and give you the proper direction you need. We're just hoping to open your eyes to an idea that might help you out.

Deductible Traditional IRA Rules

In order to make a deductible contribution to a Traditional IRA, which is the whole point of this strategy, you have to satisfy certain conditions. Anyone with earned income can make a contribution to a Traditional IRA, but depending on the retirement package your employer offers and your income, your deduction may not be tax deductible. If it's not tax deductible, then it's really not worth investigating for the purposes of reducing your taxes.


Jan 10th, 2015

Are you studying on the go? Check out our FREE app and post questions on the fly!
Download on the
App Store
...
Jan 10th, 2015
...
Jan 10th, 2015
Dec 6th, 2016
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer