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Can I deduct a traditional IRA contribution, or no? I make…

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Can I deduct a traditional...
Can I deduct a traditional IRA contribution, or no?
I make 90k a year (gross), live in Maryland, single, no dependents, no house no deductibles, have some stock and borrowed from my Roth IRA last year. I have student loans but I found out this year that if I make more than 80k, student loan interest is not deductible - resulting in about 6k worth of tax I have to pay (according to turbo tax).
I had claimed 5 allowances last year because in the past I was able to deduct my student loan interest (which is super high). This year, I just moved it down to 2 allowances in the hopes of avoiding this mistake come 2017.
I am trying to find out what can bring this down a bit (medical bills won't work). I have a 401k at work and a Roth 401k. To test it out, I put $5,500 in a traditional IRA within Turbo Tax and it did bring down my debt by a lot, but I am not sure if that is actually correct. I know that it has to do something with my modified income, but I am just not sure.
In addition, I am trying hard to avoid this same thing from happening next year, but every calculator I use seem to give me different totals for my take home pay. How do I know how much taxes are actually taken out of me if I claim 1 allowance? Is there a point where I reach a ceiling? As in no more than a certain percentage is taken out regardless of the number of allowances?
Bot***** *****ne, I don't want to end up with just $3500k a month in take home pay - I can't survive on that in Maryland and pay back debt!
Thanks!
L
Submitted: 2 years ago.Category: Tax
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Answered in 9 minutes by:
3/3/2016
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
Robin D.
Robin D., Senior Tax Advisor 4
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Hello

You may be able to claim a deduction on your individual federal income tax return for the amount you contribute to a Traditional IRA.

Your deduction may be limited if you are covered by a retirement plan at work and your income exceeds certain levels. At single if you earn $61,000 or less you can deduct your IRA in full. $5500 is the most you can contribute unless you are age 50 or older then you can contribute $6500.

About your allowances. The more allowances you claim the less tax is withheld but if you do not have those amounts to deduct when you file, you owe. If you owe too many years the IRS will make you claim Single and 0 (they issue a Lock In Letter).

The size of a withholding allowance depends on the length of your pay period and is derived from an annual basis amount that is equal to the amount of one personal exemption. The personal exemption amount is $4000. SO you could say each allowance equals $4000 that is tax free.

Try the IRS W4 calculator

https://www.irs.gov/Individuals/IRS-Withholding-Calculator

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