I know you can deduct IRA from your taxes, but will it increase your tax refund if you pay your IRA?
I mean suppose the gov. has deducted taxes from your salaries, but they actually have to give you a small refund, if you get an IRA will it increase the size of the refund?
but will that adjustment result in increased refunds, assuming you had a small refund, from the taxes the gov. retained from your salary each month?
September 1st, 2010 at 11:34 am
A contribution to a traditional IRA reduces your AGI… If you already have a small refund… A contribution to a traditional IRA will increase your refund. If you are in the 25% bracket. A $1000 contribution will increase your refund by $250.
You have until April 15th to make a 2007 contribution.
Edit: YES, it will increase your refund.
September 1st, 2010 at 11:34 am
a traditional IRA will only be an adjustment to your income
September 1st, 2010 at 11:34 am
Assuming that you owe some tax for the year (don’t get all of your federal income tax withholding refunded) then yes, contributing to a traditional IRA will increase your refund.
September 1st, 2010 at 11:34 am
If you contribute to a conventional IRA, the amount of your contribution is deducted from your taxable income, so you pay tax on a smaller amount of income – therefore less tax. For a Roth IRA, there is no change.
September 1st, 2010 at 11:34 am
If your income is still within range, you may contribute to a traditional IRA (as many already have discussed in this thread). The traditional IRA reduces your income and can be designated for a prior year, provided you make the contrib before April 15.
Lower income means lower taxes, so for instance, if you were in the 15% bracket and you contributed $1,000 to a traditional IRA, your refund increases by $150.
If there are still more questions, it’s best to sit down with a good tax accountant so he/she can show you more details regarding *your* situation.
September 1st, 2010 at 11:34 am
It depends. If you are eligible to make the traditional IRA contribution, it should reduce your taxes and therby increase your refund.