Turbotax, we have a problem-spousal IRA

[RogerD1]

The rules given for the Kay Bailey Hutchinson Spousal IRA contribution are not the only factors that determine the limit of the spousal contribution.  Here are some other factors:

• If the working spouse is covered by a retirement plan at work, the non-working spouse's deduction will start to be limited for incomes in excess of $236,000 and is completely phased out above $246,000.
• A working spouse covered by a retirement plan at work will have a limited deduction for incomes above $126,000, with the deduction fully phased out for an income above $146,000
• For low incomes, the total contribution is limited to the couple's taxable compensation.

Based on the screenshot above, it appears that you are using the downloaded version of TurboTax.  To see how the amounts above were determined you can view the IRA Deduction Worksheet as follows:

1. On the blue banner, click on Forms on the far right.
2. On the left side menu that appears, look for a form called IRA Worksheet.
3. After viewing the form, you can return to the interview mode by clicking on Step by Step in the blue banner.

[jnfrench]

Thank you. The three bullet points you listed do not apply to this example.

I understand how it works (I have been using TurboTax for at least 20 years) and the tax laws, but there is a bug in TurboTax that is not calculating the allowable deduction for spousal IRA contributions correctly (Specifically the IRA Calculator Tool under Other Tax Situations). If that is not clear from what I have already posted, please let me know, and I will provide additional examples to help.

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[saunder1]

I am not having a problem with deduction of the IRA. I do not qualify for that. But my spousal IRA is being taxed on the contribution when I should be allowed to contribute $8000k for 2025 without paying taxes on that contribution.

The spousal IRA does not have any income limits other than that the spouse must make enough money to fund the spousal IRA (plus their own if they choose to do so).

I believe you are referring to the rules for being able to DEDUCT an IRA.

Where the spousal IRA is deductible or not is based on income. HOWEVER, no spousal IRA contribution to a traditional IRA should be taxed so long as the spouse makes enough income to cover it.

There must be a BUG in TURBOTAX.  Does anyone know a way around it?  I appreciate any help.

I'll re-post. Perhaps this does not belong under deduction for ira.

[jnfrench]

"HOWEVER, no spousal IRA contribution to a traditional IRA should be taxed so long as the spouse makes enough income to cover it."

This is not true if the taxpayer has an employer-provided retirement plan. In that case, the deduction is income-limited.

If I have misunderstood your statement, please could you explain a little more about what you think the problem is.