Question

In tax terms, what is it called when a taxpayer puts money into an IRA?

Answer 1

When a taxpayer puts money into an IRA, it is called a contribution. An IRA is a retirement savings account that offers tax advantages. Contributions may be tax-deductible in a traditional IRA and tax-free in a Roth IRA.

Step-by-step explanation:

When a taxpayer puts money into an IRA, it is called a contribution. An IRA, or Individual Retirement Account, is a type of retirement savings account that offers tax advantages.

There are different types of IRAs, including a traditional IRA and a Roth IRA. In a traditional IRA, contributions may be tax-deductible, and taxes on the money are deferred until it is withdrawn. In a Roth IRA, contributions are made after taxes are paid, and qualified withdrawals are tax-free.