There's still time to make a last minute 2023 IRA contribution and possibly claim a tax break. Here's who qualifies – CNBC

The tax deadline is fast approaching, but there’s still time to earn a deduction for pre-tax individual retirement account contributions, if you qualify.

The IRA contribution limit for 2023 is $6,500, with an additional $1,000 for investors age 50 and older. In 2024, it will increase to $7,000 and he will have an additional $1,000 in contributions.

You can add funds to your IRA in 2023 until April 15, the federal tax deadline for most taxpayers. However, you must specify a deposit for the 2023 tax year.

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Last-minute pre-tax IRA contributions in 2023 may qualify for an “above the line” deduction, which can be claimed even if you haven’t itemized for tax relief and will reduce your adjusted gross income.

But IRA deduction rules can be “very confusing,” said Mark Steber, chief tax information officer at Jackson Hewitt.

Eligibility for the pre-tax IRA deduction depends on your filing status, Adjusted adjusted gross income and workplace retirement plans.

If your workplace doesn’t have a retirement plan, IRA deductions have no income limits, which can make them attractive to high-income earners, experts say.

But when you’re attending an event, things get even more complicated. workplace retirement benefits system. “Participation” may include employee contributions, company matching, profit sharing or other employer deposits.

“It’s important to understand that there are limits to deductions,” Malcolm Etheridge, a certified financial planner and executive vice president of CIC Wealth in Rockville, Maryland, recently told CNBC.

Depending on your filing status and income, you may be able to deduct all, part, or no pre-tax IRA contributions. The IRS’s complete eligibility chart is below. available here.

For 2023, there is a full deduction for single filers with modified adjusted gross income of $73,000 or less, and a partial deduction up to $83,000.

The limits are even higher for married couples filing jointly, with a full deduction for income up to $116,000 and a partial deduction for income up to $136,000.

“Even if you max out your plan at your current company, your income may still be low enough to qualify for the tax deduction. [IRA] I contributed,” Ethridge said.

Experts say that while it may be tempting to earn a deduction on last-minute pre-tax contributions, you need to consider your goals and timeline before proceeding.

CFP Laura Mattia, CEO of Atlas Fiduciary Financial in Sarasota, Fla., said the contributions could provide benefits this year, but could pose “tax issues” in the future. He said it would only cause it.

Additionally, you need to weigh your immediate priorities, including major expenses, because you “don’t want to use your retirement savings for short-term savings,” she says.