2019 is in the rearview mirror but there is still time to reduce your taxable income for last year:
Make a tax-deductible contribution to your IRA.
If you qualify, an IRA contribution can be a great way to reduce your 2019 taxes. You are allowed to contribute up to $6,000, or even more if you are an old-timer like me: $7,000 for people age 50 and over.
Plus, if you are married, you can double up the amount with a spousal IRA.
If you are not covered by a retirement plan at work, you can deduct the full amount of your contribution, regardless of how much money you make.
If you do have a retirement plan at work, there are restrictions and limitations to qualify for the full deduction. Here’s a table that summarizes these rules. They are confusing so feel free to shoot me an email with any questions.
2019 Traditional IRA deduction limits
| Filing Status | Modified adjusted gross income (MAGI) | Deduction Limit |
| Single individuals | ≤ $64,000 | Full deduction up to the amount of of your contribution limit |
| > $64,000 but < $74,000 | Partial deduction | |
| ≥ $74,000 | No deduction | |
| Married (filing joint returns) | ≤ $103,000 | Full deduction up to the amount of of your contribution limit |
| > $103,000 but < $123,000 | Partial deduction | |
| ≥ $123,000 | No deduction | |
| Married (filing separately)* | Not eligible | Full deduction up to the amount of of your contribution limit |
| < $10,000 | Partial deduction | |
| ≥ $10,000 | No deduction | |
| Non-active participant spouse (e.g., those with spouses who earn no income) | ≤ $193,000 | Full deduction up to the amount of of your contribution limit |
| > $193,000 but < $203,000 | Full deduction up to the amount of of your contribution limit | |
| ≥ $203,000 | Full deduction up to the amount of of your contribution limit |
If you’re self-employed, you can sock away a lot more by opening up a Simplified Employee Pension (SEP) plan before filing your taxes. For 2019, you can contribute up to $56,000, depending on your income.
Let me know if you have any questions!
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
