TurboTax 2018 - 2019 Traditional and Roth IRA Tax Advantages Guide
Tax Deductions for Contributions to a Traditional IRA
The contributions you make to a Traditional individual retirement account, or IRA may entitle you to a tax deduction each year.
Traditional IRA's are tax-deferred, meaning you are not required to pay tax on any interest or other gains the account earns until you withdrawal the money. Additionally, the contributions you make to an IRA may entitle you to a tax deduction each year.
The Internal Revenue Service (IRS) restricts who can claim a tax deduction for contributions based on various factors...
While contributions to a traditional IRA are most likely tax deductible, you’ll have to pay income taxes when you withdraw the money. Plus, you must start taking annual distributions after you reach the age of 70½ which are then considered taxable income.
Deposit Your Tax Refund Directly In An IRA Account
Consider depositing your tax refund in an individual retirement account, This could be eligible for claiming a tax deduction on your current or a future tax return. In this case, you don't have to pay taxes on your IRA contribution until you the money is withdrawn from the account.
You can set up a direct deposit for your tax refund to be deposited to your IRA account. IRS Form 8888 allows taxpayers to deposit their tax refund directly into two or three different accounts, including a traditional IRA, Roth IRA, SEP-IRA or myRA. You can request that the Treasury send your refund directly to the custodian or trustee of an IRA. It's that easy!
Tax Deductions for Contributions to a ROTH IRA
Contributions to a Roth IRA, in contrast, are made with after-tax dollars and are not tax deductible. You get years of tax-free growth just like a traditional IRA. However, with the Roth IRA, there is generally no income tax on withdrawals as long as you’re age 59½ or older and have held the Roth IRA for at least five years. Additionally, there is no requirement to take any distributions during your lifetime.
TurboTax Investment Guidance Helps With Converting a Traditional IRA to a Roth IRA
New rules now allow taxpayers to convert their traditional IRA to a Roth IRA. Now everyone can convert a Traditional IRA to ROTH IRA.
Preparing for retirement should start a an early age, but for many it's just a struggle to ketch up. The tax advantages of IRA investment offer a simple means to getting something going for your future. Plus, if you work in your own field as self employed, investing in your retirement is a must since you are the only one governing how cushy those future days will be.
TurboTax Self Employed Retirement Planning Video
A retirement nest egg is no doubt a settling factor in feeling more comfortable as the years tick by. TurboTax addresses investment concerns on Roth IRA investing so that taxpayers can make wise financial decisions.