Does Contributing to a Roth IRA Increase Your Tax Refund?

A Scripted Freelance Writer Writing Sample

Roth IRAs are a potentially lucrative investment vehicle available to U.S. taxpayers. As of 2011, they are available to individuals with a modified adjusted gross income of $120,000 or less -- $176,000 or less for married couples filing jointly. Roth IRAs are distinct from traditional IRAs, however, because contributions are not tax-deductible. How Deductions Increase Tax Refunds The amount of income tax you pay depends on the size of your income. Deductions reduce the amount of income on which you have to pay tax. Since the tax withheld by your employer is based on your income without knowledge of how many deductions to which you may be entitled, you may sometimes have too much tax withheld and be entitled to a refund. Definition of an IRA IRA stands for individual retirement arrangement. Individuals can place funds in an IRA through a bank or qualified financial institution. There are tax benefits associated with contributing money to an IRA; the specifics of those benefits depend on the kind of IRA chosen. The major types of IRAs are traditional IRAs and Roth IRAs. Traditional IRA contributions can be used as tax deductions, while Roth contributions cannot. Roth IRA Versus Traditional IRA Because Roth IRA contributions are not tax-deductible, it means that contributing to a Roth IRA will not increase your tax refund. The advantage to a Roth is that if you meet the requirements, withdrawals will be tax-free. You can also continue to contribute to a Roth IRA after the age of 70-1/2, and contributions can remain in the Roth IRA for the lifetime of the taxpayer, advantages that don't apply to a traditional IRA. Benefits of a Roth IRA Although contributing to a Roth IRA will not increase your tax refund, income earned inside the Roth IRA is tax-free. No tax is charged on Roth IRA withdrawals, provided the Roth IRA is held for a minimum of five years and the taxpayer does not withdraw any earnings on his contributions before he reaches the age of 59-1/2. Also, because you have paid tax on your contributions, you can withdraw that money at any time without having to pay a penalty.

Subscribe for the latest in Content Marketing & Freelance Writing!


Cathy L

Vancouver, British Columbia, Canada • Last online about 1 hour

I have been a freelance writer since 2006 with focus on legal research, online marketing, business, tax, travel, pet care and general interest topics. With degrees in Law and Political Science and extensive experience developing custom content, I consistently produce engaging and informative writing.

Customer Ratings 560
221 Customer Favorites
100% Followed Guidelines
Power your marketing with great writing. – Start your 30-day free trial today! Start Free Trial

While you're here, have you tried Scripted lately?

Used to be a member, but moved on? Heard of it, but never signed up? The current iteration of Scripted will amaze you! Streamline your content writing efforts and build your own team of high-quality writers. It's all you need for content writing. Try it free today and meet your next favorite writer or writers!

Scripted’s talented community of freelance writers have a variety of expertise and specialties. While many of our customers hire writers to execute their content marketing strategy, our writers deliver high-quality content in many formats. You can find content writers, blog writers, ghostwriters, and SEO writers all with experience in your niche.