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Can I Deduct My IRA Contributions?

Whether or not you can deduct a 2001 contribution to an Individual Retirement Account depends on several factors:

  1. Did you have wages, self-employment income or alimony of at least $2,000? (Or, if less, the amount you are planning to contribute to the IRA?) Exception: If filing jointly, you can contribute up to $4000 for you and your spouse who does not work..
  2. At the end of the year, were you under the age of 70 1/2? IF #1 and #2 are YES, go on to #3. If either is NO, you cannot make a contribution to an IRA for the tax year.
  3. Were you (or your spouse, if married) an active participant in an employer pension plan for any part of the tax year? IF #3 is NO, you can deduct your IRA contributions. If #3 is YES, go on to #4.
  4. Was your Adjusted Gross Income under $33,000 (single or Head of Household), $53,000 (married filing jointly) or ZERO (married filing separately)? If YES, you can deduct your IRA contributions. If NO, go on to #5.
  5. If your Adjusted Gross Income exceeds the limits in #4 by MORE than $10,000, you cannot deduct your IRA contributions, but may contribute to your IRA as a non-deductible contribution. If your Adjusted Gross Income exceeds the limits above, but by LESS than $10,000, a partial deduction would be allowed - See the Form 1040 instructions for a worksheet.
  6. Spousal IRA - if the spouse is not covered by a pension plan, under new rules which took effect in 1998 they are NO LONGER considered covered by a pension plan as was the old law.  NEW - the spouse can contribute up to $2000 whether regardless of wages.  NOTE - this spousal IRA is still subject to phase outs starting at $150,000 and ending at $160,000.






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We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

Copyright 2017 Wink Tax Services / Wink Inc.
Last modified: January 30, 2017