7 Tax Breaks Every Middle-Class American Should Know

Tax Breaks to Save for Retirement

Here’s a rule of thumb: anyone with earned income (aka income from work, not investments) can contribute to a traditional IRA – but not anyone who contributes can claim a tax deduction. Basically, if someone is rich and covered by a retirement plan at work, they don’t sign up on the list.

This is how deduction rules operate for traditional IRAs:

• You can contribute with up to $5,500 each year (or $6,500 if you will be at least 50 years old by the end of the year)
• If you are currently not enrolled in a 401(k) plan (or any other workplace retirement plan for that matter), you can deduct your IRA deposits regardless of how high is your income;

* Do note that for 2018, the deduction phases out for income between $63,000 and $73,000 for singles and between $101,000 and $121,000 for couples.