Traditional IRAs (and other traditional retirement accounts) can save you a ton of money on your taxes because contributions you make to them aren’t taxed today. This video explores precisely how much money you can save on your federal tax bill just by maxing out your traditional individual retirement account, in every tax bracket. If you are in the higher tax brackets then you will be phased out and won’t be able to take the tax deduction, but you still can for traditional 401(k) contributions, so the math works in both ways.
#IRA #RetirementAccount #TraditionalIRA
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Timestamps:
0:00 Introduction
0:27 RECAP Traditional vs Roth
1:11 How Traditional IRAs Save You Money
2:36 How To Calculate IRA Tax Savings
4:33 2021 Tax Brackets
5:19 2021 Standard Deduction
6:16 Single: Traditional IRA Savings
7:23 Married, Filing Jointly: Traditional IRA Savings
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does this differ any if you are filing a 1099 form?
Hi can I buy Ira in March 2022. And use it for taxes right off for 2021
Weve got something similar in the uk! Lifetime isa & i love it!
I think it’s important to note (esp. for those of us in the lower 2 or 3 marginal tax brackets) that making max. contribution to the traditional IRA is not unconditionally the best play. One needs to see whether or not, after various other tax credits for which one may be eligible, one actually has taxable income to be offset after the standard deduction. If not, then the best play is to do both: contribute to the traditional IRA until you have zeroed your return, then max out your contribution for the year with a Roth IRA contrib. Another way to think about it: there is no reason to unconditionally incur future ordinary income tax liability (Trad. IRA) if you can instead arrange for tax free future investment income (Roth IRA) and still have a perfectly optimized (ie zero) tax position for the current tax year.
New mic? Vox sound vastly improved.