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In other cases, pre-tax deductions only delay your tax obligations — 401(k) contributions, for example, are taxed when you begin making withdrawals in retirement later down the road.
When you contribute to a pre-tax retirement plan (such as an IRA), you can deduct those contributions from your tax return. And if you’re self-employed, you can open a Solo 401(k) plan and ...
If you are converting deductible, pre-tax contributions from a traditional IRA, you will be taxed at your ordinary income rate that year, so be sure that you have enough cash on hand to pay those ...
Pre-tax deductions are deductions that are taken out of an employee's gross pay amount before it is subject to tax. [8] and could include health, dental, or life insurance, deductions for certain retirement accounts, or deductions for FSA or HSA accounts.
Though some cafeteria plans offer an explicit choice of cash or benefits, most today are operated through a "salary redirection agreement", which is a payroll deduction in all but name. Deductions under such agreements are often called pre-tax deductions. Salary redirection contributions are not actually or constructively received by the ...
Above and below the line refers to items above or below adjusted gross income, which is item 37 on the tax year 2017 1040 tax form. [2] Tax deductions above the line lessen adjusted gross income, while deductions below the line can only lessen taxable income if the aggregate of those deductions exceeds the standard deduction, which in tax year ...