Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain levels. You may be able to request a deduction on your individual federal income tax return for the amount you contributed to your IRA. Contributions you make to a traditional IRA account may entitle you to a tax deduction each year.
Traditional individual retirement accounts (IRAs) are tax-deferred, meaning you don't have to pay taxes on interest or other earnings that the account earns until you withdraw the money. Contributions you make to the account may entitle you to a tax deduction each year. However, the Internal Revenue Service (IRS) restricts who can claim a tax deduction for contributions to traditional IRAs based on several factors. Contributions to a traditional IRA may be tax-deductible for some investors.
If you (and your spouse, if you're married) aren't covered by an employer-sponsored retirement plan, you can deduct your full contribution from your taxes. Your ability to deduct an IRA contribution in part or in full depends on how much you earn, whether you or your spouse are currently contributing to other qualified retirement plans, and what type of IRA you have. If you don't have taxable compensation but file a joint return with an earning spouse, you can open an IRA in your name and make contributions through a spousal IRA. People who juggle multiple IRA accounts or who set automatic contributions that are too high could end up investing too much money in a Roth IRA or a traditional IRA.