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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: medinaj2160 on March 04, 2014, 05:06:57 PM

Title: Do we qualify for a traditional IRA? Taxes
Post by: medinaj2160 on March 04, 2014, 05:06:57 PM

Me and my wife make a total of $120,000 a year. This year we will max out the 401Ks for the first time; so we will saving $35,000 + the match ($38,000).

I want to try to pay as little taxes as possible and I am wondering if we can contribute to a traditional IRA. We have access to a HSA account which I believe we can contribute a max of $6000 but we are not contributing. We live in South Carolina.

Thanks

Title: Re: Do we qualify for a traditional IRA? Taxes
Post by: MDM on March 04, 2014, 06:00:55 PM

Check the IRS web site for IRA contribution limits (http://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits).  There are various rules depending on your specific situation.

Title: Re: Do we qualify for a traditional IRA? Taxes
Post by: DougStache on March 04, 2014, 06:48:07 PM

You have a situation similar to mine, although we have less income and only one 401k to contribute to.  Your MAGI needs to be less than $96,000 to contribute to a 401k and a traditional IRA.  Napkin math tells me your MAGI is ~$120,000 - $35,000 = $85,000, give or take for other adjustments. 

So, yes, you can contribute to Traditional IRA's and take another chunk off your tax bill.

Title: Re: Do we qualify for a traditional IRA? Taxes
Post by: medinaj2160 on March 04, 2014, 07:18:19 PM

Quote from: MDM on March 04, 2014, 06:00:55 PM

Check the IRS web site for IRA contribution limits (http://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits).  There are various rules depending on your specific situation.

thanks

Title: Re: Do we qualify for a traditional IRA? Taxes
Post by: medinaj2160 on March 04, 2014, 07:21:37 PM

Quote from: DougStache on March 04, 2014, 06:48:07 PM

You have a situation similar to mine, although we have less income and only one 401k to contribute to.  Your MAGI needs to be less than $96,000 to contribute to a 401k and a traditional IRA.  Napkin math tells me your MAGI is ~$120,000 - $35,000 = $85,000, give or take for other adjustments. 

So, yes, you can contribute to Traditional IRA's and take another chunk off your tax bill.

That's what I thought...

So I can possibly deduct 11K and 6K from the HSA, right?

Is there a good tax calculator to see what difference does it make to max out all my tax deductible accounts vs just maxing out the 401k? I want to see how much money I would be leaving on the table.

Title: Re: Do we qualify for a traditional IRA? Taxes
Post by: Cheddar Stacker on March 04, 2014, 07:28:37 PM

This one is pretty quick, easy, and accurate.

https://turbotax.intuit.com/tax-tools/calculators/taxcaster/