Are My IRA Contributions Tax Deductible?

by Michael on Jan 29, 2014 · 2 comments

Image of IRA Nest Egg

One of the big reasons that many people contribute to a traditional IRA is for the tax deduction. But not all contributions qualify.

How do you know if you’ll be able to deduct your IRA contributions? Simple. Just compare them to the applicable income limits.

For 2014, these limits (like IRA contribution limits themselves) are increasing — though another important factor is whether or not you’re covered by a retirement plan at work.

For single filers (or heads of household) that are covered by a retirement plan at work, you can deduct your entire contribution if your modified AGI is $60k or less. Between $60k and $70k you can claim a partial deduction. And above $70k, you can’t deduct your contributions at all.

Note: In 2013, the traditional IRA deduction phased our between $59k-$69k.

If you’re not covered by a retirement plan at work, then you can deduct your full contribution no matter how much you earn.

For married filing jointly, if you are covered by a retirement plan at work, then you can deduct your entire contribution if your modified AGI is $96k or less. Between $96k and $116k you can claim a partial deduction. And above $116k, you can’t deduct your contributions all.

If you’re not covered by a retirement plan at work but your spouse is, then you can claim a full deduction if your modified AGI is $178k or less. Between $181k and $191k you can claim a partial deduction. And above $191k, you can’t deduct your contributions at all.

Note: In 2013, the traditional IRA deduction phased out between $95k-$115k or $178k-$188k, depending on your circumstances.

If neither you nor your spouse is covered by a retirement plan at work, then you can deduct your full contribution(s) no matter how much you earn.

And remember… You have until the income tax filing deadline (April 15, 2014) to make your 2013 IRA contributions.

Source: IRS.gov


{ 2 comments… read them below or add one }

1 The College Investor December 28, 2012 at 12:21 pm

Thanks for clarifying the goals. I always find it confusing.

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2 Jacob @ My Personal Finance Journey January 30, 2013 at 7:26 pm

It’s always good to have a reminder of these things, first because they tend to change, and two because people’s salaries tend to fluctuate, so it’s good to know where you fall in to the rules.

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