Why can't I deduct my traditional IRA contribution even though I don't have a retirement plan? Box 13 in my W2 is empty. However, system still says "Income too high".

[rdlo]

I thought that if I don't have a qualified retirement plan (Box 13 empty), I could deduct the entire limit $6000.

[SweetieJean]

Is your spouse covered by a retirement plan?

[rdlo]

No, I filed as a single taxpayer.

[ThomasM125]

Your income should not affect your ability to make a deductible IRA contribution if you don't have a retirement plan at work. I suggest you delete your W-2 entry and re-enter it.

[rdlo]

Thank you. 

I deleted it and it still wouldn't let me deduct.  However, I noticed that I do have an entry on Box 12, under code BB. This is what is preventing me to deduct contribution.

I thought Box 13 was the only checkbox determining if I was an active participant at a retirement plan, but it seems that even if Box 13 is unchecked, Box 12 can also determine it. I guess I was part of a retirement plan and didn't know it.

Thanks.

[BillM223 · Accepted solution]

Good catch.

BB refers to "Designated Roth contributions under a section 403(b) plan. Use this code to report designated Roth contributions under a section 403(b) plan." See W-2 Instructions, page 21.

If you look a bit further along in the W-2 Instructions, you will see that for box 13, a 403(b) is one of the retirement plans that should trigger the checkmark in the appropriate box 13. You might remind your employer that the retirement plan box should be checked (note that the W-2 Instructions above are instructions for the employer to fill out the W-2).

You may not have noticed because it is a Roth plan, so there is no deduction from Wages in box 1 on the W-2, unlike the more common 401(k) plan.

[esque1]

The IRA deduction is not showing even though there is no retirement plan.  It tells me that they have an income limit.  Nothing is checked in box1 13 or 12.  I deleted the w-2 and reentered.

What can I do to get this correct?

[TomD8]

@esque1 --  There is no income limit for contributions to a Traditional IRA.  However, income limits do apply to Roth IRA contributions.

A Traditional IRA does have income limits with regard to the deductibility of contributions.