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Retirement tax questions

I realize your frustration and I understand, please accept my apologies. 

First, let me explain the difference between earned and unearned income.

Earned Income is wages, net earnings from self–employment, certain royalties, honoraria, and sheltered workshop payments. Basically money earned by services you perform. 

  • Earned income is required to be able to put any money into an IRA.

Unearned Income is all income that is not earned from your services, such as Social Security benefits, pensions, unemployment benefits, interest income, dividend income, and capital gains.  

  • This is not considered when determining if you can put money into an IRA.

What can you contribute to your IRA for 2017?

For 2015, 2016, 2017 and 2018, your total contributions to all of your traditional and Roth IRAs cannot be more than: $5,500 ($6,500 if you're age 50 or older), or your taxable compensation for the year, if your compensation was less than this dollar limit.

What amount of your contribution can you deduct for 2017?

This depends on whether you are in a covered pension plan at work (check your W2 box 13).  

  1. If you are in a covered plan your deduction starts to phase out when your modified adjusted gross income is more than $99,000 but less than $119,000.  Over this amount there is no deduction.
  2. If you are NOT in a covered plan your deduction starts to phase out when your modified adjusted gross income is more than $186,000 but less than $196,000. Over this limit there is no deduction.
  3. IRA Deduction Limits

I hope I have helped with your concerns and questions.