CD/PC - Why is my refund amount reduced by my legitimate IRA contributions? Visible in top window & IRA Calc box. Ex: Refd $3400, IRA +$6500, Tax -$390, Refd $3010.

[DCL117]

I am using to purchased CD version on my Win 10 PC. I sent in a comment detailing what I thought was a Bug on this same issue.

[dmertz · Accepted solution]

2017 TurboTax will show your IRA contribution as an excess contribution until you have made entries substantiating that you are indeed eligible to make the contribution.  Contributing to a traditional IRA requires that you have sufficient compensation and that you did not reach age 70½ or older in 2017.  Contributing to a Roth IRA requires that you have sufficient compensation and that your modified AGI does not exceed the amount corresponding to your filing status above which you are no longer eligible to contribute to a Roth IRA.

Compensation generally is the amount in box 1 of your W-2 minus any amount in box 11, or net earnings from self-employment.  Eligible compensation does not include any amounts excluded under the Foreign Earned Income Exclusion.

See IRS Pub 590-A for eligibility requirements (which your entries into TurboTax must substantiate):

https://www.irs.gov/pub/irs-pdf/p590a.pdf