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Outsmart the Taxman: Tax Benefits of an IRA

Mar 12, 2020, 15:12 PM
Outsmart the Taxman

 

Like most of us, you look to itemize anything you can and pay less on your taxes. With that in mind, did you know an Individual Retirement Account (IRA) could hold tax benefits for you? Even if you’re not old enough to retire, you’re old enough to establish a good money plan and possibly enjoy some nice tax benefits in the meantime

By opening an IRA, the money you put into it can be used to offset the income you’ve made*. For example, if you make $50,000 a year but put $5,000 into an IRA, you could be taxed on $45,000 versus $50,000. Bonus: You’ll also earn interest on your contribution!

Think you’ve missed your opportunity for the 2019 tax filing year? It’s not too late to get those tax benefits! You can open an IRA and contribute to it up until April 15, 2020, which is the tax filing deadline for 2019.

Here’s some information from the IRS you may find helpful when considering contributing to an IRA:

For 2019, your total contributions to all your traditional and Roth IRAs cannot be more than:

  • $6,000 ($7,000 if you're age 50 or older), or
  • Your taxable compensation for the year, if your compensation was less than this dollar limit.

Visit the IRS’ website for more information on IRA contribution limits.

* Consult your tax advisor regarding potential tax benefits. 

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