An IRA Could Reduce What You Owe on Your Taxes
If you finish your taxes and end up owing money, opening an IRA or contributing to one you already have could be a way to decrease your tax burden.
What is an IRA?
IRA stands for individual retirement account. It is a long-term savings account that enables you to save for retirement slowly and affordably over many years.
There are two different types of IRAs – Traditional and Roth. With a traditional IRA, you don’t pay taxes on the money you earn until you start withdrawing it during retirement. With a Roth IRA, you pay taxes on your earnings now, instead of paying them during retirement. This gives you more money when you need it most.
How can an IRA reduce what I owe on my income taxes?
You can make contributions to an IRA all the way through April 15 for the previous tax year. Depending on your income and other factors, part or all of your contribution may be deductible on your tax return. This is a great way to pay yourself and invest in your future before you have to pay the government. Of course, everyone’s financial situation is different, so consult with a tax advisor if this is why you are opening an IRA.
How can I open one?
If you don’t currently have an IRA, the team at Kelly Community can help you open one. We’ll make sure you rest easy knowing you’re set up for later in life. Take a look at our IRA information and learn more about opening an account.
Still have questions about an IRA? Send us a message today so we can answer them!