What You Need to Know About the IRA Tax Deduction

There are few better ways to decrease your tax bill, and thereby increase you tax refund, than taking advantage of the IRA tax deduction. Assuming you qualify for it, making a contribution to a traditional IRA allows you to reduce your taxable income by as much as $5,500 -- $11,000 if you're married filing jointly.

How big of an impact does this have on your tax liability? Consider this: If you and your spouse earned a combined $90,000 in taxable income last year and didn't contribute to a retirement plan at work, then you could decrease your tax bill by $2,750 simply by transferring $11,000 from your savings account into an IRA account.

Think about that for a second. It's basically the same thing as investing $8,250 into the stock market and getting an immediate 33% return. Take it from someone who writes about investing for a living, that's unheard of -- and particularly when you consider that it carries no risk.

With this in mind, I created the following short presentation, which covers the most important things you need to know about the IRA tax deduction.

Are you tired of paying too much in taxes?
Tax increases that took effect at the beginning of 2013 affected nearly every American taxpayer. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2885581, ~/Articles/ArticleHandler.aspx, 9/2/2015 3:17:19 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Maxfield

John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

Today's Market

updated Moments ago Sponsored by:
DOW 16,264.33 205.98 1.28%
S&P 500 1,936.52 22.67 1.18%
NASD 4,708.93 72.82 1.57%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes