For those of you who have Individual Retirement Accounts (IRA) who haven’t made a 2022 contribution, you still have time. You have until April 18, 2023.
The IRS gives you some wiggle room up until the official filing date for 2022 taxes. For 2022, you could contribute $6,500 if you qualified under IRS’s income limits. In 2023, the contribution limit rises to $7,000 a year.
Here’s where it gets tricky: You may be able to deduct your contribution, based on certain limits:
* If you are single or head of a household, making $68,000 or less, you can make a full deduction up to the amount of your contribution limit for the 2022 tax year. The write-off completely phases out for this category above $78,000 annually.
* For those married filing jointly or qualifying widow(er) earning $109,000 or less, you reap a full deduction up to the amount of your contribution limit. The deduction phases out for those earning more than $129,000 annually.
* Those married filing separately making less than $10,000 earn a partial deduction.
“If you prepare your tax return,” advises Emily Brandon in US News, “you can plug in an IRA contribution and see exactly how much your tax bill will decline. For example, a worker in the 24% tax bracket who contributes $6,000 to an IRA will pay $1,440 less in federal income tax. Taxes won’t be due on that money until it is withdrawn from the account.”