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Why are our IRA deductions nondeductible if we have an AGI of $80,000, and no retirement plan at work? We are both retired as of August.

Our foreign income was excluded, but with my wife's pension and investment income, our AGI should allow us to deduct a donation to our individual IRAs,

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Level 3

Why are our IRA deductions nondeductible if we have an AGI of $80,000, and no retirement plan at work? We are both retired as of August.

IRA Contributions can be made up to the amount of your "earned income" during the year.  If your foreign "earned income" was excluded, and there is no other "earned income" reported on your return, you will not be able to make IRA contributions for 2018.  

Check out the last bullet item on page 6 under "What Isn't Compensation" for reference:  https://www.irs.gov/pub/irs-pdf/p590a.pdf#page=6.

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2 Replies
Level 3

Why are our IRA deductions nondeductible if we have an AGI of $80,000, and no retirement plan at work? We are both retired as of August.

IRA Contributions can be made up to the amount of your "earned income" during the year.  If your foreign "earned income" was excluded, and there is no other "earned income" reported on your return, you will not be able to make IRA contributions for 2018.  

Check out the last bullet item on page 6 under "What Isn't Compensation" for reference:  https://www.irs.gov/pub/irs-pdf/p590a.pdf#page=6.

View solution in original post

New Member

Why are our IRA deductions nondeductible if we have an AGI of $80,000, and no retirement plan at work? We are both retired as of August.

Thank you!