Hi, need some tax advice. I am ready to file taxes for 2020. My income is between 30-35k. I have 2 kids so my EIC will be quite large. Does it make sense to open a IRA, deposit around 6k, which would then lower my taxable income to about 24-29k and get me about a extra 1k on my EIC? and I could potentially get more refund due to having less of a tax liability and also due to the savers credit?
I don't plan on keeping the money there for a long time. I would wanna buy a house in the next 2 yrs (approx), so I would be able to take out up to 10k penalty free from a IRA for first time home buyer.
The main issue I have is if I would want to get a mortgage I would obviously have to be making a lot more than 35K, so in 2 years from now when I gd willing have a larger income and I pull the money out to buy a house, my tax bracket on the money I put in will be potentially be considerably higher than it is now.
any advice would be appreciated. thanks