For 2020, you can contribute as much as $6,000 to an IRA, or $7,000 if you're aged 50 and older. But you must have enough earned income to cover the contribution. If your earned income for the year is less than the contribution limit, you can only contribute up to your earned income. There are, however, eligibility limits. For single taxpayers in 2020: You can contribute up to $6,000 to a Roth IRA, or up to $7,000 if you are 50 or older, only if your income is $124,000 or less. You can make a partial contribution to a Roth IRA if your income is between $124,000 and $139,000. Once your income tops $139,000, you are not eligible to contribute to a Roth IRA.For married couples in 2020, Note: TurboTax will guide you through this decision- -follow this link for more information-Deductions Allowed for Contributions to a Traditional IRA ... $6,000 or $7,000 contributions can be made for each spouse, if income is under $196,000. The right to make contributions is gradually phased out as income rises between $196,000 and $206,000.

Question

What What are the the rules for making a contribution to my IRA this year before 4/15/2021 that will lower my 2020 taxes. I have been drawing down on this IRA for several years.

Forum|Forum|5 years ago
March 17, 2021
1 reply
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RayW7

For 2020, you can contribute as much as $6,000 to an IRA, or $7,000 if you're aged 50 and older. But you must have enough earned income to cover the contribution.

If your earned income for the year is less than the contribution limit, you can only contribute up to your earned income.

There are, however, eligibility limits. For single taxpayers in 2020:

You can contribute up to $6,000 to a Roth IRA, or up to $7,000 if you are 50 or older, only if your income is $124,000 or less.
You can make a partial contribution to a Roth IRA if your income is between $124,000 and $139,000.
Once your income tops $139,000, you are not eligible to contribute to a Roth IRA.

For married couples in 2020,

Note: TurboTax will guide you through this decision-

-follow this link for more information-

Deductions Allowed for Contributions to a Traditional IRA ...

$6,000 or $7,000 contributions can be made for each spouse, if income is under $196,000.
The right to make contributions is gradually phased out as income rises between $196,000 and $206,000.

B

BobFopeAuthor

The reply to my question was prompt and useful. However, subsequent searching on my part I found the key answer to my question, and that is a restriction that you must be younger than 70 years old at the end of the tax year. I am now 91 years old and that means I cannot make contributions to my IRA, at least for the purpose of lowering my 2020 taxes.

I could not find that reference in the current version of TurboTax and it should be there. A simple question as you move through the deductions or credits that are available would be, "were you over the age of 70 at the and of 2020?"

Also, while I have some attention, I read today that one of the provisions of the new 2021 pandemic stimulus act was that the first $10,200 of unemployment benefits you received in 2020 is now tax free. Fortunately I have not filed my taxes for 2020 yet and have until May 17, to do so. I am hoping that TurboTax will immediately adjust their program to include this new provision before I file taxes. According to my information, people who have already filed will get a refund automatically as computed by the IRS. But, it will take a while for them to plow through all those filings.

D

DanaB27

Please be aware, for 2020 and later, there is no age limit on making regular contributions to traditional or Roth IRAs (IRS). But you will need taxable compensation (wages, salary, self-employment income) to be able to contribute an IRA.

Yes, if your modified adjusted gross income (AGI) is less than $150,000, then you can exclude up to $10,200 of unemployment compensation paid in 2020 from your taxable income. TurboTax Online has implemented this if you enter your unemployment income but TurboTax is still working on the update in TurboTax Desktop.

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