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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Saving money today for your retirement takes discipline, but you can enjoy immediate gratification in the form of a tax deduction with a traditional IRA. A big plus: You don’t have to itemize. Traditional IRA contribution limits 2016 2017 Younger than 50 $5,500 $6,500 Age 50 or older $5,500 $6,500 But before the lure of lower taxes prompts you to open a traditional IRA, be aware that a contribution won’t cut your tax bill dollar for dollar. Rather, your contribution amount is subtracted from your income to help determine your taxable income — and your tax bill. The allowable contribution amounts can be deposited into your traditional IRA as late as the annual tax-return filing deadline and still count toward cutting your prior year’s tax bill. You even can file your return before you make your contribution. Income limits
If you or your spouse has a retirement account at work, including a 401(k) plan option, a Keogh or simplified employee pension IRA, or SEP IRA, for self-employment income, you might not be able to take the full tax break of a traditional IRA. But a portion of your contribution still might be deductible, as long as your income falls below IRS limits. For 2016 returns, a single or head-of-household filer with a company-provided pension plan can earn up to $71,000 and still get a partial IRA deduction. The earnings cap is $118,000 for joint filers where one or both spouses have a company retirement plan. If you don’t have a company plan but your spouse does, the modified adjusted gross income limit before you lose your full deduction is even higher: $194,000. If you’ve already contributed for 2016 and want to put in money for the 2017 tax year, the contribution amounts, regular and catch-up, are the same. The 2017 for getting a partial IRA deduction if you also have a work-based retirement plan. The worksheet in the Form 1040 instructions, or 1040A booklet if you file that form, will help you figure out how much of your contribution you can deduct. Of course, tax software does this calculation for you automatically. Use to see the impact of contributions to a workplace plan on your take-home pay. Other IRA considerations
Keep in mind that you might not be able to max out your IRA contribution at the annual limit. You can contribute, and potentially deduct, only as much as you earn. If you make $3,800 this year, then that’s the most you can put in any IRA. And if you’re 70 1/2 or older, you can’t put any more money into your traditional IRA. In fact, that’s the age when the IRS demands you start taking money out of your traditional, tax-deferred retirement account. You can once you retire, or if you’re still earning money. Related Links: Related Articles: SHARE: Kay Bell Related Articles