Do I get a tax credit if I contribute to my Rotha IRA?

Answer 1

No you get the benefit of tax free withdraws from the Roth IRA when you retire

Answer 2

You can not deduct a Roth IRA contribution on your current taxes. The contributions, however, earn interest tax-free with no taxation when the funds are withdrawn (unlike the traditional IRA's). There are some tax credits for savers in lower income tax brackets. It's all at IRS.gov. Also, you can file your own taxes for FREE through the IRS.gov links if you meet certain income and age limits.

Answer 3

No, contributions to a Roth are not deductible. However, there is NO tax levied on the distributions if you withdraw after age 59 1/2. That is the benefit of a Roth IRA.

Answer 4

Nope. A contribution to your Roth IRA does not reduce your tax liability for the year in which you contribute. In effect, you pay tax on the amount you put into your Roth IRA. The benefit of the Roth IRA, however, is that when you withdraw from your Roth IRA, your withdrawals are tax free. This is especially great if you're young.

For example, you're young right now and your income is decent but not super high. This means your tax bracket is a little lower. At this point, you contribute $4000 into your Roth IRA (check for maximum contribution limits) but you also end up paying 20% tax on that, equivalent to $800 dollars. Now, over the next 20 years, lets say your initial $4000 becomes $30000 through good investing practices. (Good job!) At this point in your life, you make more income now so you now pay in the 35% tax bracket, let's say. Now, you want to withdraw from your Roth IRA (assuming you are old enough so you don't incur penalties) that entire $30000. Now, instead of paying 35% of that ($10500) in taxes, you get it tax free! Which means, essentially, in the end, you paid only $800 of taxes on $30000!

Contributing to a Roth IRA has many advantages, especially if you're young and you expect your tax bracket to go up as you get older and retire. If you are already near retirement, you may want to consider a conventional IRA. Check with a financial advisor if you can.

Answer 5

No. Roth IRA contributions are not deductible. But they grow tax free, not tax deferred like traditional IRAs. When it comes time to make withdrawls after age 59 1/2, there is no tax on the withdrawl.

Answer 6

No, because withdrawals from a Roth are tax-free. Withdrawals from a traditional IRA are taxed as income in the year you take it, hence the current credit (otherwise you would be taxed twice)

Answer 7

Roth IRA's are funded with post-tax money, so no you don't. The adjustment for IRA contributions is just for traditional IRA's, not Roths.

Answer 8

Bostonia above gave the correct answer. I can't improve on that and I'm a CPA. But I will say that, except for people who may be within five years fo retiring, generally over the life of the investment, the ROTH ends up being a better deal, even without the initial deduction.

(And BTW, its a deduction, not a credit.)

Answer 9

Yes

Answer 10

Oops, no, see Bostania