Funding an IRA Did you know you can make IRA contributions for the previous year up to the April tax filing deadline? The maximum annual contribution to all IRAs combined is $6,000 ($7,000 for those age 50 and older) in 2022. This hypothetical example is used for illustrative purposes only. The actual net savings in federal income taxes owed will vary. Contribution Current-year tax savings by tax bracket 12% 22% 24% 32% 35% 37% $6,000 $720 $1,320 $1,440 $1,920 $2,100 $2,220 $7,000 $840 $1,540 $1,680 $2,240 $2,450 $2,590 Incentive to Save Potential tax savings for maximum allowed traditional IRA contributions Cut Taxes Today Contributions to a traditional IRA are generally tax deductible, but deductibility is limited for higher-income workers who are active participants in an employer-sponsored retirement plan. For the 2022 tax year, the phaseout ranges are $68,000 to $78,000 (single filers) and $109,000 to $129,000 (joint filers).* Whether you owe taxes or expect a refund at tax time, the reduction in your tax liability could help fund your retirement contribution (see below). There may also be a reduction in your state income taxes. And don’t forget the potential for tax-deferred growth over the coming years. *2021 phaseout ranges were $66,000 to $76,000 (single filers) and $105,000 to $125,000 ( joint filers).
Made with FlippingBook