Yes, if you are under the age of 70 1/2 as of 12/31/18, you may be eligible to make a deductible IRA Contribution since your W-2 is considered "earned income" even though it is for vacation pay.
Whether or not you can make a Deductible IRA Contribution depends on your Modified Adjusted Gross Income (MAGI) and whether or not you are "covered" by an Employer-Sponsored Retirement Plan. If the Retirement Plan Box is checked on Line 13 of your Form W2, you will be considered "covered" for purposes of this calculation.
If you are unmarried and you are not covered by an Employer Sponsored Retirement Plan, you can make a Deductible IRA Contribution no matter what your MAGI. [If you are Married Filing Joint and you are not covered by an Employer Sponsored Retirement Plan but your spouse is, your ability to make a Deductible IRA Contribution phases out when your joint MAGI is between $189,000-$199,000]
If you are covered by an Employer Sponsored Retirement Plan, your ability to make a Deductible IRA Contribution phases out when your MAGI hits certain levels based on your filing status:
- Married Filing Joint or Qualified Widow: Phases out between $101,000-$121,000
- Single or Head of Household: Phases out between $63,000-$73,000
- Married Filing Separate: Phases out between $0 - $10,000. (Married individuals who live apart at all times during the year are treated as Single).
You can check out this IRS link for more about these limitations: IRA Limits.
For additional details, you check out the TurboTax FAQ below: https://ttlc.intuit.com/replies/3301534
