How much can we deduct for our taxes owed for investing in an IRA?

Question

My husband is self employed.

Answer 1

You get no deductions for 'investing' in an IRA. The money grows tax defered. If you are talking about 'contributing' to one, then you get up to $5,000 ($5,500 if you are over 50 years of age).

Now with your husband being self-employeed, he can contribute to a SEP. This is a retirement account that is seperate from an IRA, but contributions are made from the business revenue, and not from his taxable earnings. That limit to contribute is 25% of net profits (profits after self employment taxes are paid) or $42,000 (which ever is less).

Answer 2

There is a section, on the federal 1040 form, to deduct the amount you added to your IRA for 2006. Remember, you can only deduct the amount you added each year.