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Other taxpayers could still make nondeductible contributions to an IRA. [10] The maximum amount allowed as an IRA contribution was $1,500 from 1975 to 1981, $2,000 from 1982 to 2001, $3,000 from 2002 to 2004, $4,000 from 2005 to 2007, $5,000 from 2008 to 2012, $5,500 from 2013 to 2018, and $6,000 from 2019 to 2022.
For example, a contribution of the 2008 limit of $5,000 to a Roth IRA would have been equivalent to a traditional IRA contribution of $6667 (assuming a 25% tax rate at both contribution and withdrawal). In 2008, one could not contribute $6667 to a traditional IRA due to the contribution limit, so the post-tax Roth contribution may be larger.
A taxpayer must earn qualified income in order to make a contribution. Also, a taxpayer's IRA contributions cannot exceed that taxpayer's income in a given year. For example, if a taxpayer makes a total of $2000 in taxable compensation in a given year, then the maximum IRA contribution is $2000.
Contribution limit. A Roth IRA has a relatively low contribution limit compared to employer-sponsored 401(k)s. The maximum you can contribute is $7,000 — or $8,000, if you’re 50 or older.
You may still be able to make a contribution to a Roth IRA for 2007. In order to be eligible to make a Roth IRA contribution, you must have taxable compensation like wages, but your compensation ...
Roth IRA contribution limits for 2012. Source: IRS. Note the middle categories ranging from $173,000 to $183,000 of AGI for joint filers and from $110,000 to $125,000 for single filers.
Thus, the overall contribution limit (barring limits) is 20% of 92.9% (that is, 18.6%) of net profit. For example, if a sole proprietor has $50,000 net profit from self-employment on Schedule C, then the "1/2 of self-employment tax credit", $3,532, shown on adjustments to income at the bottom of form 1040 , will be deducted from the net profit.
“Continue contributing to a Roth or traditional IRA, but remember the contribution limits are relatively low compared to a 401(k),” Meyer said. (The maximum contribution is $7,000 for 2024).
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