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Question
do i pay taxes on my ira
AI accountant’s answer:
It depends on the type of IRA you have: a Traditional IRA or a Roth IRA. For a Traditional IRA: 1. Contributions: If you make pre-tax contributions to a Traditional IRA, you generally get a tax deduction for the year you contribute, reducing your taxable income for that year. 2. Withdrawals: When you take money out of a Traditional IRA in retirement (after age 59½), the withdrawals are subject to income tax at your ordinary income tax rate at the time of withdrawal. For a Roth IRA: 1. Contributions: You make contributions to a Roth IRA with after-tax dollars, so you don't receive a tax deduction for your contributions. 2. Withdrawals: Qualified withdrawals from a Roth IRA are generally tax-free, as long as you meet certain conditions. This means once you reach age 59½ and have had the Roth IRA for at least five years, you can withdraw the money (including contributions and earnings) tax-free. Keep in mind that early withdrawals before the age of 59½ can result in taxes and penalties, with some exceptions. It's best to consult the specific rules for your IRA type and your individual situation to understand the tax consequences.
Comment from reviewer
Judah Broussard, EA, JD

The response is right and likely fitting but really fleshing out more detail for the question is important in this context. For example, if pulling money out of an IRA, let's say at age 42, and presuming no exceptions like terminal illness, the answer to this question changes from, "Yes, lots of tax, tax on tax, tax galore," to, "No, IRAs are not subject to present-year tax" if the IRA income is left alone in the fund — not taxed in the present year.

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