How to Make Pre-Tax Contributions to a Traditional IRA

by Mark Kennan

A contribution to a traditional IRA typically results in an income tax deduction, making a traditional IRA a pre-tax retirement plan. Making contributions on a pre-tax basis most benefits people who expect to pay more in taxes for the current year than when they take distributions. To get credit for your contribution, you must report it properly on your income tax return, and you must make sure you are eligible to claim the deduction.

1. Compare your modified adjusted gross income to the annual limits to make sure you are eligible to deduct your traditional IRA contribution if you or your spouse are covered by an employer plan. The limits are found in IRS Publication 590. If you are unsure of whether you are covered by an employer plan, check your Form W-2. In box 13, if the "Retirement Plan Box" is checked, you are covered. If you are not covered by an employer plan, you can always deduct your contribution.

2. Make a contribution to your traditional IRA before your tax deadline, typically April 15 of the following year. If you make your contribution after the end of the calendar year but before the tax deadline, tell your financial institution that you want it to count for the previous tax year.

3. File your income taxes using Form 1040 or Form 1040A, because Form 1040EZ does not permit you to deduct traditional IRA contributions. If you use Form 1040A, report the amount of your deduction on line 17. If you use Form 1040, report your deduction on line 32.

Items you will need

  • IRS Form 1040 or Form 1040A

Photo Credits

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