The IRS disallowed an IRA deduction for a contribution made by my unemployed wife to her traditional IRA. The IRS stated that you can't claim an IRA deduction if you were an active participant in the Simplified Employee Pension (SEP) Plan. Since our filing status is married filing jointly, is my wife considered an active participant in my SEP even though I am the sole proprietor of my business? The deduction for my contribution to my SEP was allowed on the same tax return.
