Calculating Deductible Amount of IRA Contribution

By | March 13, 2014

There are only certain amounts of an IRA contribution that can be deducted from taxes.


Calculating Deductible Amount of IRA Contribution

Allowable contributions to traditional IRAs are always fully deductible if the taxpayer (and spouse, if married) is not an active participant in an employer-maintained retirement plan. If the taxpayer (or his or her spouse) is an active participant in an employer plan and modified adjusted gross income (AGI) exceeds certain limits, the taxpayer cannot deduct the full amount of the IRA contribution and may not be able to deduct any of the contribution. These charts show the income range in which your deduction may be disallowed if you or your spouse participates in a retirement plan at work:


When are IRA Deductions Allowed?

2013 IRA

2014 IRA

2015 IRA

See Publication 590Individual Retirement Arrangements (IRAs), for additional information, including how to report your IRA contributions on your individual federal income tax return.


Married Couples and IRA Contributions

For married couples, one spouse’s participation in an employer plan not only subjects his IRA contribution deduction to phase-out, but it also causes his spouse’s contribution deduction to be subject to phase-out. There are two deduction phase-out thresholds for married couples when only one spouse is covered by an employer plan: one for the participant spouse and another for the nonparticipant spouse.

Many nonworking spouses can make IRA contributions because they can base it on all or part of the working spouse’s earned income. In addition, when the working spouse participates in an employer-sponsored plan, it is possible that the nonworking spouse’s IRA contribution is deductible while the working spouse’s is not.