@Rolex2001 wrote:
Identical situation except it pertains to my spouse. Can I assume that my spouse can put $7,500 ( max allowable) into her IRA to reduce taxable income as long as the amount in box #1 (w-2) is greater than $7,500?
Thanks
No. You need to look at box 3 (social security wages). That's what the IRS uses to determine if income is "compensation from working" or "earned income." Also note, I believe that if a person is on long term disability, only the first 12 months is considered "earned income" and after 12 months it is considered "unearned income", not compensation from working, and not eligible to make IRA contributions.
However, if you have earned income/compensation, your wife can make IRA contributions from your income, even if she does not have her own earned income. In that case, you and your wife's combined contributions can't be more than your earned income.
