Tax Deduction for IRA contribution?

[NotSoNew]

What is the name of your state? NJ

I am doing my parents taxes for them (on turbo tax). They owe 1200 dollars, my mom told me her friend contributes to an IRA so she ends up not owing. However when I put that they contribute in (they have till April 17th to contribute) it doesnt change any info. I tried 2000 and then 4000 (i think the max is 4000) am I doing something wrong? What does it depend on?

 

[LdiJ]

What is the name of your state? NJ

I am doing my parents taxes for them (on turbo tax). They owe 1200 dollars, my mom told me her friend contributes to an IRA so she ends up not owing. However when I put that they contribute in (they have till April 17th to contribute) it doesnt change any info. I tried 2000 and then 4000 (i think the max is 4000) am I doing something wrong? What does it depend on?

Do they contribute to 401ks through work?..if so, how much do they contribute?

 

[NotSoNew]

no, they didnt contribute through any plans at work, they were going to start one now and wanted to see how much they had to contribute to decreased what they owe. I saw on the forms they can do a traditional or a Roth, and they have to April 17th to contribute and they can still claim it for last years, but no matter what I put in its not reducing their amount owed.

 

[NotSoNew]

I get the following message when I run the review:

We have calculated a non deductable traditional IRA contribution for John on Form 8606. Before finalizing the return, we want to verify that John did not have any previous basis in John's IRA accounts.

Basis exisits ONLY if John ever made any nondeductibable contributions to traditional IRA's before 2005.

Do you want to enter prior year basis amounts for John's IRA's?

Is it nondeductible because he doesnt have any basis?

*** Names changed to protect the innocent, please forgive the typos!

 

[NotSoNew]

well i tried everything and this damn turbo tax wont give me any deduction, but when i fill out the worksheet by hand i get a dedution for it, it would reduce the amount owed by 300 dollars if they contributed 2000K. I wonder why turbo tax wont give it to me, that makes me nervous. I know you hate turbo tax.

 

[LdiJ]

well i tried everything and this damn turbo tax wont give me any deduction, but when i fill out the worksheet by hand i get a dedution for it, it would reduce the amount owed by 300 dollars if they contributed 2000K. I wonder why turbo tax wont give it to me, that makes me nervous. I know you hate turbo tax.

I have had several clients this year who couldn't get Turbo Tax to give them deductions that they were entitled to receive, so they gave up and came to me. I don't know if its a glitch in the software or in the instructions what to do.

My recommendation is that you either use another online provider, or see a local tax professional.

You might try www.taxesanytime.com Its 24.99 for federal and state, combined.

 

[shell007]

well i tried everything and this damn turbo tax wont give me any deduction, but when i fill out the worksheet by hand i get a dedution for it, it would reduce the amount owed by 300 dollars if they contributed 2000K. I wonder why turbo tax wont give it to me, that makes me nervous. I know you hate turbo tax.

I'm obviously confused, but why would they SPEND $2000.00 to save $300.00?

 

[fairisfair]

I'm obviously confused, but why would they SPEND $2000.00 to save $300.00?

Because they aren't "spending" it, they are putting it into a retirement account.

 

[shell007]

Because they aren't "spending" it, they are putting it into a retirement account.

Makes sense. I just thought the OP's parent's didin't have/want to pay the $$$, and that the son was looking for a way to get around it.

 

[NotSoNew]

hey i am their daughter! LOL

they dont want to now that i told them, they thought it would save them more, then they were only paying themselves, but for a 300 dollar savings they arent going to do it. i was just trying to figure it out!

thanks