The IRS announced that taxpayers of all ages may be eligible to claim a deduction on their 2020 tax return for contributions to their Individual Retirement Arrangement (IRA) made through April 15, 2021. Usually, contributions to a traditional IRA are deductible, and distributions are taxable. These are the most notable features in the IRS notice.
According to the IRS, there is now no maximum age for making IRA contributions. The limit for contributions has been raised from $6,000 to $7,000. Qualified contributions are deductible up to the contribution limit or 100% of the taxpayer’s compensation, depending on whichever is less. If a taxpayer is covered by a workplace retirement plan, the deduction for contributions to a traditional IRA is usually decreased depending on the taxpayer’s modified adjusted gross income.
If you want more information on IRA contributions, please contact Lakeesha Browne, CPA.
“Tax Time Guide: Get Credit for IRA Contributions Made by April 15 on 2020 Tax Returns.” IRS, 11 Mar. 2021, https://www.irs.gov/newsroom/tax-time-guide-get-credit-for-ira-contributions-made-by-april-15-on-2020-tax-returns Accessed 12 Mar. 2021.