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
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