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After preliminary tax calculation I am trying to reduce the

liability for 2012. Question concerns...
After preliminary tax calculation I am trying to reduce the liability for 2012. Question concerns making a simple IRA contribution for 2012. We file married, jointly. My wife is in a qualified retirement plan, I was not for 2012. Our adjusted income was 260,822. Can I/we make the IRA contribution and would it help reduce our tax liability?
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Answered in 6 minutes by:
4/1/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Verified
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for your question, and thanks for using JustAnswer.com. While you can make a contribution to your IRA you will not get a deduction. It will increase the basis in your IRA so you will not pay tax when you pull this contribution out of your IRA. I would recommend a Roth IRA in your case, but your income is too high to qualify to be able to contribute to a Roth IRA.

Please let me know if you need anything additional. I'm truly sorry that this will not help you lessen your tax burden for 2012. Had there been better news to report, I would have been thrilled to give you that information. Please don't shoot the messenger!

Thanks again for using JustAnswer.com and have a great day.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not to be construed as financial or legal advice. Please contact a local tax professional, and do not rely on this assessment to avoid penalties or to make financial decisions. This is for informational purposes only**


You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

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Customer reply replied 4 years ago

I will gladly rate you excellent. are there any other methods of reducing the tax liability I have at this time that you may be aware of?


 

Not as they relate to retirement account contributions. Just make sure you deduct your mortgage interest, real estate taxes, state taxes, charitable contributions, and the other itemized deductions you are entitled to.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not to be construed as financial or legal advice. Please contact a local tax professional, and do not rely on this assessment to avoid penalties or to make financial decisions. This is for informational purposes only**


You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Ask Your Own Tax Question
Customer reply replied 4 years ago

OK one last item, could you provide the details as to why we are ineligible for the IRA deduction so I have the clear picture.


Thanks


 

I missed something in your original post - you said simple IRA deduction. I missed the word "Simple" - are you self employed?

If so, you can take the deduction for your contribution - my advice was for a traditional IRA

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not to be construed as financial or legal advice. Please contact a local tax professional, and do not rely on this assessment to avoid penalties or to make financial decisions. This is for informational purposes only**


You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Ask Your Own Tax Question
Customer reply replied 4 years ago


I am not self employed. I guess that would be a traditional IRA. Sorry I was not clear. Just wanted the clarification of the rule. Also, is there any benefit for filing married, separately with regards XXXXX XXXXX IRA contribution?

Thank you for your follow up. There is no benefit to filing separately. IN fact, the income levels are much lower for those filing separately than filing joint. You can CLICK HERE for IRS information on the deduction limits based on income.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not to be construed as financial or legal advice. Please contact a local tax professional, and do not rely on this assessment to avoid penalties or to make financial decisions. This is for informational purposes only**


You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,592
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Verified
Megan C and 87 other Tax Specialists are ready to help you
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Thank you for the positive rating. Please come back and see me next time you have a question. It was a pleasure working with you today. Have a great afternoon.
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Thank you for the positive rating. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question, and it will be routed directly to me. Thank you again for using JustAnswer. For the quickest service, please post a new question.
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Megan C
Megan C
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Satisfied Customers: 16,592
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