With tax season in full swing, many married couples are looking for last-minute ways to maximize their retirement savings and tax benefits. And if one partner is not working, they may miss out on the opportunity to roll over retirement assets into their name, not to mention the tax-deferred growth opportunities as a couple.
How does contributing to an IRA lower your taxes?
One strategy that’s still available in 2024: contributing to a spousal IRA. This can be beneficial for couples where one partner earns significantly less than the other, or has no income at all. Here’s how it works.
The IRA contribution limits for 2023 are $6,500 for those under 50 and $7,500 for those 50 or older. You can make IRA contributions for 2023 up until the non-extended federal tax deadline (for income earned in 2023). Generally, you can only contribute up to these limits to your own IRA, which means you must have income that allows you to do so. And as always, you can and should max out these limits if possible. However, with a spousal IRA, your spouse can also contribute up to the limit to an IRA in your name.
That effectively doubles the amount your household can put aside each year in IRAs (pre-tax or Roth). The only requirement is that the spouse owning the IRA must have enough earned income to cover both contributions.
