One of the best ways to lower your taxable income is to make contributions to a traditional IRA. If you haven’t maxed out your contributions for the year, adding funds to your IRA will help you to save money when you file your taxes.
For the 2018 tax year, contributions to your retirement accounts (including traditional and Roth IRAs) are capped at $5500. If, however, you’re at least 50 years old, you can contribute up to $6500 a year. Not only will maxing out your contributions this tax year help lower your tax bill, but it will also help to set you up for additional earnings in the future.
Keep in mind that not all IRA contributions are tax deductible. Traditional IRA contributions may be tax deductible, but you may be limited in your savings based on whether you are covered by a retirement plan at work and whether your income exceeds a certain level. Roth IRAs, on the other hand, won’t provide you with any tax savings up front, but you can look forward to tax-free distributions from these accounts in the future.
If you’re ready to learn more about how adding to your retirement accounts can help lower your tax bill, turn to the tax resolution pros at Pro Tax Resolution today!