Traditional IRA Contribution Deductions refer to the tax deductions available for contributions made to a Traditional Individual Retirement Account (IRA).
When individuals contribute to a Traditional IRA, they may be eligible to deduct the amount of their contributions from their taxable income, which can reduce their overall tax liability for the year. The eligibility for these deductions can depend on several factors, including the taxpayer’s income level, filing status, and whether they or their spouse are covered by an employer-sponsored retirement plan.
For example, for the tax year 2023, if a single filer is not covered by a workplace retirement plan, they can deduct the full contribution amount up to the annual limit. However, if they are covered by a plan, the deduction may be phased out if their modified adjusted gross income (MAGI) exceeds certain thresholds.
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