If you're preparing to file your 2023 tax return, you may still be able to lower your tax bill - or increase your refund. If you qualify, you can make a deductible contribution to a traditional IRA right up until the original filing deadline, April 15, 2024, and see tax savings on your 2023 return.
For eligible taxpayers, the 2023 contribution limit has increased to $6,500, or $7,500 for taxpayers aged 50 and up on Dec. 31, 2023. If you're a small business owner, you can establish and contribute to a Simplified Employee Pension (SEP) plan up to the extended due date of your return. The maximum SEP contribution you can make for 2023 is $66,000.
What determines eligibility? To make a fully deductible contribution to a traditional IRA, you (and your spouse, if you're married) must not be active participants in an employer-sponsored retirement plan or, if you are, your 2023 modified adjusted gross income (MAGI) must not exceed the applicable limits:
For single taxpayers covered by a workplace plan, $73,000 (partial deduction available up to $83,000 MAGI).
For a married couple filing jointly, where the spouse making IRA contributions is covered by a workplace plan, $116,000 (partial deduction available up to $136,000 MAGI).
If the spouse making the IRA contributions isn't covered by a workplace plan but his or her spouse is, $218,000 (partial deduction available up to $228,000 MAGI).
For married couples filing separately, where at least one spouse is covered by a workplace plan, the ability to deduct IRA contributions is extremely limited.
Contact the office if you want more information about this important topic to help you save the maximum tax-advantaged amount for retirement.