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Question
my company has a 401(k) plan, but I only started working since min July, can I still contribute some money to my IRA with tax deduction?
AI accountant’s answer:
Yes, you can still contribute to a traditional IRA and potentially qualify for a tax deduction, even if you started working mid-year and participated in your company's 401(k) plan. For the 2022 tax year, you can contribute up to $6,000 to an IRA ($7,000 if you are age 50 or older). However, since you are covered by a 401(k) plan at work, there are income limits that determine if your IRA contributions are deductible. For the 2022 tax year, if you're filing as a single taxpayer or head-of-household, the deduction begins to phase out (reduce) when your modified adjusted gross income (MAGI) reaches $68,000 and is fully phased out when your MAGI reaches $78,000. If you are married filing jointly, the deduction begins to phase out at $109,000 and is fully phased out when your combined MAGI reaches $129,000. You should calculate your MAGI and see if you're within the income limits to ensure your IRA contributions qualify for a tax deduction. Keep in mind that the deadline to contribute to an IRA for the tax year 2022 is April 15, 2023.
Comment from reviewer
David Bailey, EA, MBA
Not Correct.
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