Can I not deduct my IRA contribution of $5500? My employer's retirement plan was closed in 2016 but I received my distribution (rollover) in 2017. My AGI is $240,000.

If you are not covered by a retirement plan at work and are single (or married and your spouse is not covered by a retirement at work), then there is no income limit for an IRA contribution.

If you are married and tour spouse is covered by a retirement plan at work, then you cannot claim an IRA deduction if your joint Modified Adjusted Gross Income is greater than $196.000.

Please read this IRS document for more information:

https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-i...

If you are not covered by a retirement plan at work in 2017, make sure that box 13 on your W-2 form is not checked.

Box 13 is not checked on any of our W-2's so why is Turbo Tax telling me Income too high to deduct?

The only thing I can think of is a data entry error. Please review your entry for your 1099-R.

Please also revisit your IRA contribution interview. In the interview, there is a question asking whether you are covered by a retirement plan at work. Make sure that you answer No.