The IRS is reminding taxpayers they may be able to claim a deduction on their 2020 tax return for contributions to their Individual Retirement Arrangement made by April 15, 2021.
There is no longer a maximum age for making IRA contributions.
Contributions to traditional IRAs, which enable employees and the self-employed to save for retirement, are generally tax deductible. Taxpayers can file their 2020 return claiming a traditional IRA contribution, even if that contribution has not yet been made, provided the contribution will occur by April 15.
Eligible taxpayers can contribute up to $6,000 to an IRA for 2020. For someone who was 50 years of age or older at the end of 2020, the limit is increased to $7,000. Previous restrictions that applied to taxpayers 70 ½ years of age or older were removed in 2020.
However, if a taxpayer is covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is reduced depending on the taxpayer’s modified adjusted gross income.
Single or head of household filers with income of $65,000 or less can take a full deduction up to the amount of their contribution limit. For incomes more than $65,000 but less than $75,000, there is a partial deduction and after $75,000 or more there is no deduction.
Filers that are married filing jointly or a qualifying widow(er) with $104,000 or less of income, a full deduction up to the amount of the contribution limit is permitted. Filers with more than $104,000 but less than $124,000 can claim a partial deduction. If their income is at least $124,000, no deduction is available.
For more information from the IRS about IRA contributions and deduction limits go here. Taxpayers can find answers to other tax questions, forms and instructions and tools online at IRS.gov.
