Will that free me from actually paying this years Federal Taxes?
2007-12-08 03:15:37 · 2 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
No. You'd only get an AGI adjustment for the amount of the funds contributed to the IRA. That assumes of course that it is a traditional IRA. You get no adjustment if it's a Roth IRA.
The tax reduction would depend upon your tax bracket. If you contributed $4,000 and are in a 25% tax bracket your tax bill will drop by $1,000. You'll still have to pay $3,000 when you file if $4,000 is your total tax bill.
2007-12-08 04:03:56 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Uh, no. An IRA contribution just makes that much of your income tax free, it's not a credit that subtracts the amount from your total TAX owed. It will take a percentage of the IRA contribution off of your taxes - the percent depends on your tax bracket.
2007-12-08 11:20:44 · answer #2 · answered by Judy 7 · 0⤊ 0⤋