Tw upQuestion 33 of 50.Which of the following statements about traditional IRAs is TRUE?O Taxable investment income, such as interest, dividends, and capital gains, will qualify as compensation for the purpose ofcontributing to an IRA.Taxpayers who participate in an employer-sponsored retirement plan are prohibited from contributing to an IRA.Taxpayers with a timely-filed extension have until October 15 of the tax year to establish and contribute to an IRA.Taxpayers have until the due date of the return (not including extensions) to reduce their tax liability by contributing to an IRA.Mark for follow upQuestion 34 of 50.

A traditional IRA is an individual retirement account to which you can make pre-tax or post-tax contributions. If the contributions of tax payers are tax deductible, then they are able to claim the immediately benefit from the tax savings.Explanation for incorrect options: There is no upper age limit for traditional IRA contributions for tax years starting after 2019. Rent, interest, and dividend income, as well as any money received as pension or annuity income or as deferred pay, are not considered to be forms of compensation for the purposes of making contributions to an IRA. Hence, option 1 is incorrect. As per the traditional IRA, contributions to a regular IRA can be written off by taxpayers who take part in an employer-sponsored retirement plan, regardless of their AGI. Hence, option 2 is incorrect. An IRA contribution for the past tax year can normally be made up until the deadline for reporting income taxes. There are certain differences in how SEP IRA deadlines operate. Contributions to SEP IRAs can be made by taxpayers up until the return's due date (including extensions). Hence, option 4 is incorrect. Explanation for correct option: In a typical year, a taxpayer would have until October 15 to make a contribution if they filed for a six-month extension. The postmark date is regarded as timely, much like their tax return. Hence, option 3 is correct.