This is exactly my question. The limit on deductibility of a traditional IRA being related to income applies ONLY if you have "a retirement plan at work". IRS pub 590 indicates that you know if you have an IRA at work when your W2 shows the box checked by "retirement plan". My situation (and the original poster's situation) is that we are SELF EMPLOYED and have set up an SEP IRA. Thus our contributions to our SEP IRA should not constitute having "a retirement plan at work" as defined by the IRS. Thus, my view is that regardless of our income, we should be able to make a maximized SEP IRA contribution based on the amount of our self employment earnings PLUS make a fully deductible IRA contribution ($8000 for me and my spouse) in spite of having a high income. Yet turbotax says that the traditional IRA contribution is NOT DEDUCTIBLE if I make an SEP IRA contribution for the same tax year. It interprets the contribution to the SEP IRA as "having a retirement plan at work". If I delete my SEP IRA contribution for that tax year, it allows full deductibility for the traditional IRA. I think this is wrong and that since I do not have an employer sponsored retirement plan, I should be able to make a full SEP IRA contribution AND and fully deductible traditional IRA contribution for the same tax year. Please will an expert comment on this situation which is NOT COVERED at all in the IRS pub 590.
