You can enter your IRA contribution in Deductions and Credits, Retirements and Investments, Traditional and Roth IRA Contributions:
Your IRA deduction can be limited if you also contribute to a company-sponsored retirement plan. It depends on the amount and the type of income you report.
A taxpayer is considered to be a participant in a company-sponsored retirement plan if their account balance receives any contributions at all in a given year, even if all the contributions were made by the employer.
- The IRA deduction is phased out if you have between $66,000 and $76,000 in modified adjusted gross income (MAGI) as of 2021 if you're single or filing as head of household. You'll be entitled to less of a deduction if you earn $66,000 or more, and you're not allowed a deduction at all if your MAGI is over $76,000.
- The IRA deduction is phased out between $105,000 and $125,000 if you're married and filing jointly as of 2021, or if you're a qualifying widow(er). Those with MAGIs over $125,000 aren't allowed a deduction.
Form 1040, line 10a is where you enter income adjustments from Schedule 1. This amount is subtracted from your total income to get your adjusted gross income (AGI). The total income is over 125,000 but when you subtract trad IRA contributions on line 10a the AGI is now under 125,000 so the trad IRA contributions (e.g. $7000) should be deducted from the total income to get an AGI of 118,000. IRS states the MAGI has to be 125+ before IRA contributions aren't allowed.