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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2997
Experience:  IRS licensed Enrolled Agent and tax instructor
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Can an earned quarterly bonus be directly deposited by the

Customer Question

can an earned quarterly bonus be directly deposited by the paying corporation into an employees personal IRA to save being taxed.
Submitted: 11 months ago.
Category: Tax
Expert:  emc011075 replied 11 months ago.

Hi. My name is ***** ***** I will be happy to help you.

IRA is individual retirement account and your employer cannot make pretax contributions into it. You can ask your HR if they will deposit it directly into your IRA but it will be still be taxed and you will need to take a deduction on your tax return, if you are eligible.

Expert:  emc011075 replied 11 months ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

Expert:  emc011075 replied 11 months ago.

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

Customer: replied 11 months ago.
any bonus is taxable upon designation as a bonus it cant be tax deferred in an IRA or even a corporate pension?
Expert:  emc011075 replied 11 months ago.

It can be tax deferred if you put it into your 401K or other employer sponsored plan. You cannot make a pretax contribution into IRA - or any other individual retirement plan.

Expert:  emc011075 replied 11 months ago.

The main reason is that most people can contribute to IRA (as long as they have earned income) but not everybody can deduct it. Your AGI and your filing status will determine if you can deduct it or not. Your employer has no way of knowing if you will be eligible to deduct the contribution and therefore cannot make pretax contribution into your IRA.