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 $73,000 if filing single or head of household
- More than $92,000 but less than $121,000 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.
Related Resources
Learn more about reporting rental property income for your self-managed property with help from the tax experts at H&R Block.
Join H&R Block as we dig into the the mystery of deferred compensation plans for everyday people and the ultra-wealthy.
If you report income earned in a nonresident state on your resident and nonresident return, will you be double-taxed? Learn more from the tax experts
Are jury duty payments considered taxable income? Learn more from the tax experts at H&R Block.
