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Maximize Your Tax Deductions: Consider Opening an IRA

This time of year, many individuals are scrambling to gather their documents and file their tax returns. While tax deadlines loom, there's still time to make strategic moves to lower your tax liability. One often overlooked opportunity is contributing to an Individual Retirement Account (IRA) before filing your taxes.

An IRA not only helps you save for retirement but also offers potential tax benefits that could significantly reduce your tax bill. Here's why opening an IRA before filing your taxes could be a smart financial move:

1. Lower Your Taxable Income

Contributions made to a Traditional IRA are typically tax-deductible, meaning you can subtract the amount you contribute from your taxable income for the year. This lowers your overall taxable income, potentially pushing you into a lower tax bracket and reducing the amount of taxes you owe.

2. Extended Contribution Deadline

Unlike most deductions that must be made during the tax year, contributions to an IRA for the previous tax year can typically be made up until the tax filing deadline, which is usually April 15th. This means you still have time to make contributions for the previous tax year, even if you haven't filed your taxes yet.

3. Save for Retirement

In addition to the immediate tax benefits, contributing to an IRA helps you build a nest egg for retirement. The earlier you start saving, the more time your money has to grow through compound interest.

How to Get Started

To open a traditional or Roth IRA through First International Bank & Trust in a CD or savings account, please contact us or visit one of our First International Bank & Trust locations.

Once your account is open, you can make contributions either in a lump sum or set up automatic contributions throughout the year. Remember, the maximum contribution limit for IRAs in the 2023 tax year is $6,500 for individuals under 50 and $7,500 for those 50 and older.

If you have any questions or need assistance opening an IRA, don't hesitate to reach out to one of our local bankers. We're here to help you make the most of your money and achieve your long-term financial goals.

This blog is intended for informational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment or savings decisions.

Financial Planning, Personal Banking