As a consultant, I am not currently covered by retirement plan at work. I want to contribute to a traditional IRA and deduct it, but Turbo Tax will not allow it. How?

[charles-llewelly]

OK, So we can but how do we deduct the IRA?

[IreneS]

I've added steps to enter the contributions to my original answer.  Follow the instructions to enter your contribution and TurboTax will handle the rest.

[charles-llewelly]

I did the steps and have $11,500 as an IRA, but TurboTax still only gives me a $0 in the "Your IRA Deduction" screen.  It says "Because of your income, you're not eligible to take any additional deduction this year."   

Is the rule "no one who has a MAGI over $119,000 can deduct an IRA contribution", or "No one with a MAGI over $119,000 while being covered by a retirement plan at work can deduct an IRA".  Neither my wife or I have retirement plans at work as we are now both consultants.

[IreneS]

UPDATED FOR TAX YEAR 2019

It's the second--$119,000 if you are covered by a retirement plan.
Since you do not have a retirement plan "at work" you should be able to take the full deduction of $11,500, as long as one of you is over 50. Annual contribution limits per person are $6,000 ($7,000 if you are over 50).

In IRS Pub 590-A -- Contributions to Individual Retirement Arrangements (IRAs) , Tables 1-2 and 1-3 ( on page 13) show the effects on an IRA deduction if you are covered and not covered by a retirement plan at  work.

I suggest going back through the IRA section of the interview. Also, if you have any W-2s entered make sure Box 13 is not checked for Retirement Plan.

[Edited | 4/13/2020 |  12:05 am PDT]

[charles-llewelly]

Thanks Irene.  Both of us are over 50 and neither has any current retirement plans at work.  I was told by my Contacting Officer that I would be able to contribute to a an IRA, as my contract has not retirement plan.  TurboTax still will not allow the use of the IRA deduction.  How can I override this?

[IreneS]

Yes (even though we don't recommend it, because it may void the TurboTax 100% Accurate Calculation Guarantee.)

 -- Switch to Forms Mode  [For instructions see:  <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/replies/3339205">https://ttlc.intuit.com/replies/3339205</a>]    
 -- On the Mac, choose Override from the Edit menu in TurboTax.

While you're in Forms Mode go to the IRA Contribution Worksheet lines 13 and 14 to see why the deduction is not calculating.  You can override the value on line 17 of this form to enter deductible Traditional IRA contributions.  It's much better to override on a worksheet than on an actual form --it shouldn't affect your ability to -file the return.

[IreneS]

A random thought....Make sure you are entering the contributions as TRADITIONAL IRAs and not ROTH IRAs.

[charles-llewelly]

I was able to get around it by reporting the contributions to a SEP, instead of traditional IRAs.  Thanks