Note: This is not tax advice, please consult the IRS or your local tax professional.

A traditional IRA (individual retirement account) is an account in which you can take tax deductions for certain retirement contributions. Those contributions are not taxed until retirement, at a time when you will likely be taxed in a lower bracket. Depending on the math, if you are facing a large tax burden, an IRA contribution may be a good way to lower your 2007 current tax bill while boosting your retirement savings.

Here’s a simple example showing how it can help: Say you are in the 25% tax bracket and you noodle your way through your 2007 tax return and realize you are going to be nailed with a $1,000 tax bill. If you are within the income limits, you can make a contribution to a traditional IRA for $4,000 before you file your return or April 15, 2008, whichever comes first, and reduce that $1,000 tax liability to $0. Meanwhile, you’ve also put away $4,000 towards your retirement that you would not have otherwise.

The general rule is that if you are under 50, you can contribute up to $4,000 to a traditional IRA. It’s $5,000 for those over 50. If you or your spouse are covered by a retirement plan at work, you may only receive a partial deduction if you make more than the Modified Adjusted Gross Income (MAGI) limits.

The MAGI limits are not real high if you are already covered by work retirement plans. For example, if you are filing jointly and you and your spouse are both covered by work retirement plans, you only receive partial deductions if your AGI is between $83,000 and $103,000, at which point you stop receiving a deduction.

IRA contributions for the 2007 tax year are due by April 15, 2008 (that means a check postmarked by that date), or whenever you file your tax return. There are exceptions, but generally you cannot contribute to a traditional IRA for a tax year for which you have already filed a tax return.

So this means if you could potentially owe taxes you need to look at this soon to give yourself enough time to fully explore the option to see if it will help your specific tax situation as well as saving up the actual contribution before the tax deadline.

You can explore all the details of IRA contributions in the IRS’s Publication 590- 2007 IRAs or with your own tax professional.