Tax Geaks
Dec 2, 20202 min
There are cost‑of‑living adjustments that may affect a taxpayer's pension plan and other retirement-related savings next year. People should familiarize themselves with these adjustments, so they aren't caught off guard.
Determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements.
Contributing to Roth IRAs.
Claiming the saver's credit.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out. This reduction goes until the deduction is eliminated. The amount of the deduction depends on the taxpayer's filing status and income. If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs don't apply.
$66,000 to $76,000 – Single taxpayers covered by a workplace retirement plan.
$105,000 to $125,000 – Married couples filing jointly. This applies when the spouse making the IRA contribution is covered by a workplace retirement plan.
$198,000 to $208,000 – A taxpayer not covered by a workplace retirement plan married to someone who's covered.
$0 to $10,000 – Married filing a separate return. This applies to taxpayers covered by a workplace retirement plan.
$125,000 to $140,000 – Single taxpayers and heads of household.
$198,000 to $208,000 – Married, filing jointly.
$0 to $10,000 – Married, filing separately.
$66,000 – Married, filing jointly.
$49,500 – Head of household.
$33,000 – Singles and married individuals filing separately.