Standard IRA Info for 2009 Tax Year Advice Needed! (fund, 401k, income)

[Pawdog]

In a nutshell, I need some knowledgeable advice regarding Standard IRA funding to avoid paying $12,000.00, in federal taxes this year. I retired last July, and do not yet have an IRA established. However, I do have a 401K sitting with my former employer that I want to roll-over into an IRA.

Here's my question, if I open two separate IRA accounts before 04/15, one in my name and one in my wife's, and contribute the maximum, $6,000.00, for me, and $5,000.00, for her, will the deductions prevent me from having to pay most of the $12,000.00, in federal taxes I would have to pay if I don't start the IRA's?

I'm hoping by doing so, I will only have to pay around $1,000.00 in federal taxes after opening the IRA's.

Any and all advice in this area is appreciated as time is running out for me this year!

[LongArm]

Assuming you qualify to make deductible IRA contributions (for last year), you could do that, but it will just decrease your taxable income by the amount of the contribution. So, for example, if you were in the 25% tax bracket, a $11,000 IRA contribution would lessen your tax burden by $2,750.

But I am not a tax professional and you really should consult one on questions like this.

[Pawdog]

Originally Posted by LongArm

Assuming you qualify to make deductible IRA contributions (for last year), you could do that, but it will just decrease your taxable income by the amount of the contribution. So, for example, if you were in the 25% tax bracket, a $11,000 IRA contribution would lessen your tax burden by $2,750.

But I am not a tax professional and you really should consult one on questions like this.

Thanks Longarm, took your advice, and called my CPA this morning. The contributions will lower my tax payment for 2009 to around only $2,600.00. Better paying most to me in the long term than $12,000.00 to the IRS!