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April 13, 2021
Question

My Fedral tax is currently $1,472. How much can I contribute to a traditional IRA to reduce the tax amonut to zero dollars?

  • April 13, 2021
  • 2 replies
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2 replies

Employee
April 13, 2021

That depends upon your tax bracket, taxable compensation, and age.   If, for example you are in the 12% bracket, you need 1472/.12 = $12,667 to reduce the tax to zero.  If the 22% bracket, you need $6,691.  But the maximum Trad IRA contribution is $6,000 ($7,000 if age 50+).  Also see:

2020 Tax Brackets - Fairmark.com

IRA Deduction Limits | Internal Revenue Service (irs.gov)

RayW7
April 13, 2021

Another way where your income will already be calculated through TurboTax is to pretend to put in different amounts in the Retirement Savings Credit and the system will do the calculations for you.  You can change your contribution amount to see what works for you.

1.  Go To Federal, then Deductions and Credits.

2.  Select Retirement and Investments, choose Retirement Savings Credit

This is walk you through the program.  You will be able to see what will be your maximum benefit.