How to Claim Tax Relief on Pension Contributions
There are many financial and tax vehicles created in the United States in which you can invest your pension. Some of them are tax deductible, such as traditional IRA, and some not, such as Roth IRA. Funds invested in your employer's sponsored 401(k) plan, for example, are deducted from your paycheck pre-tax, so you do not have to claim a tax relief in this case. Traditional IRA contributions however, are made with after-tax money, and, therefore, can be claimed on your tax return, thus reducing your adjusted gross income. IRS regulations governing your pension contributions are very complex, but, in case of contributions to a qualified traditional IRA, here is what you need to do to claim tax deduction on your annual tax return.
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Instructions
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Calculate the total amount of your tax-deductible IRA contributions using the receipts received from the institution with which you have opened your IRA account.
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Locate line 32 if you are filing form 1040, or line 17 If you are filing form 1040A.
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Enter the total amount contributed to your tax deductible IRA account(s).
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Tips & Warnings
Thoroughly research the information in the IRS link provided in the Resources section to see if the above steps are applicable to your particular situation. Consult with a tax professional to make sure you are filing everything correctly. Traditional IRA contributions are capped at $5,000 per year if you are age 49 or younger, or at $6,000 if you are age 50 or older.
