Income too high to deduct an IRA contribution

[lindaivalentine]

I am being told in Turbo Tax that I can't deduct my IRA contribution of $7,000 because my MAGI is over the limit while being covered by a retirement plan at work.  I am 1099 and not covered by any plan at work.  How can I fix this???  I have redone my taxes twice from the beginning.

[macuser_22]

Covered by a retirement plan at work is usually indicated by box 13 on your W-2.

Make sure the W-2 (s) were entered for the correct spouse.
  Make sure that the IRA contribution is for the correct spouse.

Check your W-2 box 12 also.

TurboTax makes that determination if any of the following are true:

1) Box 13 (retirement plan) on your (or spouses) W-2 is checked,
2) Box 12 on your (or spouses) W-2 contains codes D, E, F, S, or AA/
3) You answered “yes” to the “Are you covered by a Retirement Plan at work” in the interview.
4) You have a self-employed retirement plan.

[lindaivalentine]

I don't even receive any W-2's   I am strictly self employed so have a business and receive a 1099

[DawnC]

See #3 and #4 of Champ macuser_22's reply above - TurboTax will limit your deduction if any of the following are true.  

1) Box 13 (retirement plan) on your (or spouses) W-2 is checked,
2) Box 12 on your (or spouses) W-2 contains codes D, E, F, S, or AA/,
3) You answered “yes” to the “Are you covered by a Retirement Plan at work” in the interview,  - If this is not the case, go back through the IRA deduction questions and update your answers
4) You have a self-employed retirement plan (see below).    

If you have self-employment income, you can contribute a certain amount of the profits from your business to special retirement accounts for you and your employees. Your contributions are tax-deductible. The types of self-employed retirement plans are:

• a qualified pension plan,
• a Keogh,
• a SEP,
• a SIMPLE,
• a 401(k), or
• a 403(b).

To enter contributions to self-employed retirement plans:  

• Open your tax return.  
• Click on Business (top menu)
• Click on Business Income & Expenses (top menu)
• Scroll to Other Business Situations
• Click Revisit/Start next to Self-Employed Retirement Plans

[macuser_22]

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@lindaivalentine wrote:

I don't even receive any W-2's   I am strictly self employed so have a business and receive a 1099

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As said above, does your spouse have a W-2?

Do you have a self-employed retirement plan?  SEP, SIMPLE, private 401(k)?

Switch to the forms mode if using the desktop software and view the IRA Contribution Worksheet line 10.

[help31]

Same thing.  Turbotax keeps telling me "Income Too High To Deduct an IRA Contribution" for employer sponsored plan.  I don't have an employer sponsored plan.  Need to deduct my IRA contributions for 2021.  How to do that?

[help31]

How to switch to "forms mode" - can't seem to get there.  Thanks.

[help31]

Selected "catch-up" instead of deferrals and it took the deduction. 

[fanfare]

If you are 1099, you can't contribute to a Traditional IRA.

You have to set up a SEP IRA and use that.

If you already contributed ask the custodian to reverse your contribution and close that account.

[help31]

After much wrangling, had to delete the IRA worksheets (under tools) several times and reenter the IRA contribution.  Somehow the "employer assisted" IRA plan got set...much back and forth to get rid of it.  

[LARAF]

Same problem for me. Single, Self -employed and it states my income is too hight to deduct the SEP IRA, but I am far from the max contribution of $61000

[macuser_22]

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@LARAF wrote:

Same problem for me. Single, Self -employed and it states my income is too hight to deduct the SEP IRA, but I am far from the max contribution of $61000

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A SEP is not a Traditional or Roth IRA and does NOT get entered in the IRA contributions section at all.  It is either only in box 12 on your W-2 or if self-employed in the self-employed retirement plans interview.