Can IRA help me get into a lower tax bracket?
I’m not sure from your question that you understand how tax brackets work. If you are “barely” into a higher bracket, your tax on all the money below that bracket limit is exactly the same as if you weren’t in the next bracket – the only thing you pay a higher percent on is the amount that you are over the bracket limit. But yes, if you qualify for a deductible IRA, then putting $4000 into a traditional IRA would lower your taxable income by that amount. A Roth IRA would not be deductible so would have no effect on your current year’s taxes. You have until 4/15/08 to contribute to an IRA for 2007 – be sure the custodian knows that your contribution is for 2007 though, not for 2008. If I were in my early 30’s I’d probably go for the Roth though rather than the traditional IRA. But that part is your call.
