Submitted by archiesmeatball t3_1002gw0 in personalfinance
Will I pay tax twice if I contribute to IRA from bank account?
Comments
archiesmeatball OP t1_j2f3mxz wrote
That makes sense. I have had a 401k with all previous employers so it always came out of the paycheck. Now I don’t, hence the confusion.
nothlit t1_j2f2tf5 wrote
No, you claim a tax deduction (if eligible) for those contributions when you file your tax return, which turns them into pre-tax.
archiesmeatball OP t1_j2f31wc wrote
Thanks, can you point me to eligibility criteria?
nothlit t1_j2f3bkc wrote
Mysunsai t1_j2f3b6i wrote
An IRA has nothing to do with your employer, or your payroll.
You are confused how taxes work: your paycheck withholding is not your tax, it is an estimate based ont the information you give your employer (remember form w4?, that was you telling them how much tax you think you owe). If that was incorrect, it is corrected at the end of the year (that’s your tax return, where you are refunded extra tax paid, or pay more if you didn’t pay enough). If you make an IRA contribution, you write it on your tax return to claim it as pre tax.
If you want your employer not to withhold tax on your IRA contribution, you can put that on you w4. Otherwise, you will get back any overpayment at the end of the year. In either case, it is “pre tax.” It’s just a question of when you notice the extra money.
archiesmeatball OP t1_j2f3iv8 wrote
Thanks
pancak3d t1_j2f312r wrote
You cannot contribute from a paycheck, your employer has absolutely nothing to do with your IRA