If I contribute to a 401K plan, can I open IRA to reduce taxes?
Regarding the ability to open IRA to reduce taxes, you might be able to contribute deductible amounts to an IRA. It depends on your income.
You can contribute the lesser of:
- 100% of your annual compensation
- $5,500 — $6,500 if age 50 or older
However, if you’re covered by a retirement plan at work, your IRA deduction will be reduced or phased out. This is true if your modified adjusted gross income (AGI) is:
- More than $58,000 but less than $72,000 if filing single or head of household
- More than $92,000 but less than $119,000 if married filing jointly
- More than $0 but less than $10,000 if married filing separately
If your income is more than these limits, and you open IRA to reduce taxes, you can still make the contributions, but you cannot deduct them.
Congratulations on the Bonus! Learm more about the tax rate at H&R Block - whether you receive a holiday or cash bonus, it will apply to you.
Many entrepreneurs find themselves wondering exactly how Bitcoin is taxed. Our H&R Block Tax Pros are prepared to assist self-employed filers with Bitcoin taxation.
What is Cryptocurrency? Bitcoin, Litecoin, and the like leave many wondering how to classify this new form of investment. Find the answer at H&R Block.
Have you recently earned Bitcoin income from rising stock value? Explore the rules surrounding cryptocurrency-sourced capital gains and losses with H&R Block.