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bones55
Level 2
February 24, 2021
Solved

IRA Deduction in Turbo Tax

  • February 24, 2021
  • 3 replies
  • 33 views

I am not covered by an employer retirement plan and made over $124,000 in 2020.

 

I thought I could still contribute $7,000 to an IRA and take the deduction. TurboTax is not allowing the deduction though.

 

Am I wrong about being able to contribute/deduct?

 

Thanks!

    Best answer by DanaB27

    Yes, if you were not covered by a retirement plan at work and had no spouse/ your spouse wasn't covered by a plan then you can deduct the full amount. 

     

    If you are filing married filing jointly and your spouse was covered by a plan then you deduction will be limited if your modified adjusted gross income (MAGI) is over $196,000.

     

    Please see IRA Deduction if You ARE Covered by a Retirement Plan at Work - 2020 and IRA Deduction if You Are NOT Covered by a Retirement Plan at Work - 2020  for details.

     

     

    Please check your W-2 box 13 if Retirement Plan is checked or anything in box 12 indicates that you had a retirement plan at work:

    1. Login to your TurboTax Account 
    2. Click on the Search box on the top and type “W-2”
    3. Click on “Jump to W-2”

     

    Please be aware, even if you are not allowed to deduct the traditional IRA contribution you can still make the contribution. You will have to track the nondeductible contribution on Form 8606 and later when you get distributions some of your distribution will be tax-free because of this basis (nondeductible part).

    3 replies

    D
    Employee Tax Expert
    DanaB27Employee Tax ExpertAnswer
    Employee Tax Expert
    February 24, 2021

    Yes, if you were not covered by a retirement plan at work and had no spouse/ your spouse wasn't covered by a plan then you can deduct the full amount. 

     

    If you are filing married filing jointly and your spouse was covered by a plan then you deduction will be limited if your modified adjusted gross income (MAGI) is over $196,000.

     

    Please see IRA Deduction if You ARE Covered by a Retirement Plan at Work - 2020 and IRA Deduction if You Are NOT Covered by a Retirement Plan at Work - 2020  for details.

     

     

    Please check your W-2 box 13 if Retirement Plan is checked or anything in box 12 indicates that you had a retirement plan at work:

    1. Login to your TurboTax Account 
    2. Click on the Search box on the top and type “W-2”
    3. Click on “Jump to W-2”

     

    Please be aware, even if you are not allowed to deduct the traditional IRA contribution you can still make the contribution. You will have to track the nondeductible contribution on Form 8606 and later when you get distributions some of your distribution will be tax-free because of this basis (nondeductible part).

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      B
      bones55Author
      Level 2
      February 24, 2021

      Thank you very much! I had an incorrect entry in Box 12.

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