How can I open a routh Ira before april15 to reduce the taxes I owe.

Forum|Forum|1 year ago
February 6, 2025
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Trying to reduce the taxes I owe

Best answer by dmertz

Because Roth IRA contributions are not deductible, the only way that a Roth IRA contribution would reduce your tax liability is if it qualifies you for a Retirement Savings Contributions Credit that you would not otherwise receive.

ThomasM125

You do have up until April 15 of 2025 to open an IRA for the 2024 tax season, but a Roth IRA will not reduce your tax liability, since the contributions to a Roth IRA are not deductible. If you contribute to a traditional IRA your contributions may be deductible, depending on your income and whether you have a retirement plan through your employer.

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dmertzAnswer

Employee

Opus 17

Employee

Remember that if you open a traditional IRA, and qualify to make tax deductible contributions, they will reduce your tax by 12%-30% (for most people, depending on your state), it is not a one-for-one reduction. And, you can't touch the money until you retire without paying a penalty.

It's basically a retirement savings account that you can't touch until retirement. If you deposited $7000 and qualified for the deduction, you would save between $1000 and $2500 on your taxes, depending on your other income and what state you live in, and then you can't touch the $7000.

IRAs are great ways to save for retirement, but saving on income tax is not the most important factor in this decision.