My question is related to the IRA deduction. In 2006 I change of contract with my employer. Since October 6, 2006 I am now eligible for a retirement plan with my company (401k). This appear now in my W2. (box 13)
Since I did not know it will happen I participate to my IRA from Januray to end of September 2006.
Am I eligible to claim deduction or since I am now on 401K it is not possible for 2006 at all ?
2007-03-12 03:41:26 · 6 answers · asked by Terry 1 in Business & Finance ➔ Taxes ➔ United States
you are permitted to put up to 4000.00 per year into a roth ira , since it's after tax money . with out it having any effect on your 401K
2007-03-13 04:30:03 · answer #1 · answered by Anonymous · 0⤊ 1⤋
You can contribute to your IRA regardless of whether or not it's deductible.
A Roth IRA is a non-deductible IRA you pay the taxes on the contribution to the IRA - and then don't pay taxes when you take the money out at retirement. Your Roth contribution would be limited based on whether you participate in another retirement plan and your income.
Publication 590 [http://www.irs.gov/publications/p590/index.html] gives the details - and provides a worksheet for your to calculate.
Even if you cannot get a deduction for your IRA contribution, it may still make sense to make a contribution. You should also make sure that if your are married both you and your spouse are eligible to make a contribution to an IRA [without deductions]. The money saved in an IRA does not pay taxes until you withdraw it, and this tax savings helps your investments grow faster.
A Turbo Tax or H&R Block Tax Cut software programs are relatively inexpensive and will make this calculations/worksheets for you.
A regular IRA is deductible from your taxes, but can't be deducted if you The rules for contributing to a Roth IRA are income dependent.
2007-03-13 14:10:15 · answer #2 · answered by David G 2 · 2⤊ 0⤋
Yes, you can deduct your IRA contribution's for the year 2006. Also you are eligible for a Roth IRA (or Traditional IRA) for the tax year 2006. Make sure you make your contribution before April 17th 2007.
2007-03-12 08:24:05 · answer #3 · answered by Anonymous · 2⤊ 2⤋
The answer is that it depends on how much money you made in 2006 as to wither your IRA is fully, partially, or not deductible.
The easiest thing to do is to fill out the IRA deductible worksheet in the Form 1040 instructions on page 32 to see if you can take the deduction.
2007-03-12 03:50:36 · answer #4 · answered by jks_mi 3 · 3⤊ 2⤋
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2016-11-24 22:19:10 · answer #5 · answered by Anonymous · 0⤊ 0⤋
JKS is right... depends on how much you made. If you made to much, you can take the money out of the IRA or you will be charged a penalty for the amout over the allowed amount (10-25% i believe)
2007-03-12 18:00:02 · answer #6 · answered by amanda 3 · 0⤊ 1⤋