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annie65cala
New Member

Why is TT telling me I do not qualify for a credit if I make a contribution to a traditional IRA?

 
5 Replies
Rachel_W
Level 4

Why is TT telling me I do not qualify for a credit if I make a contribution to a traditional IRA?

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 (Retirement Plan Box Checked on Line 13 of your Form W2).  

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).

If you meet all of the qualifications to make a Deductible IRA Contribution but it still isn't showing on your Tax Return, please comment below so we can help you further.

For more information check out the TurboTax FAQ below:

https://ttlc.intuit.com/replies/3301534

hankster12330
Level 1

Why is TT telling me I do not qualify for a credit if I make a contribution to a traditional IRA?

neither my wife nor I are working for anyone so I take it that means we are not covered by a pension plan. (Years ago we were covered.) We file jointly. So I interpret that we should be able to make deductible IRA contribution (no matter what our AGI is...and even that is under the $103k). But TT will not let me do it. What am I doing wrong or do not understand?

BillM223
Expert Alumni

Why is TT telling me I do not qualify for a credit if I make a contribution to a traditional IRA?

See the TurboTax FAQ whose link is given above. The first sentence says "For any Traditional IRA deduction, you must have earned income."

 

Since you say that you two are not working, I assume that you have no earned income.

 

If you don't have earned income, then you cannot deduct the contribution to a traditional IRA.

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hankster12330
Level 1

Why is TT telling me I do not qualify for a credit if I make a contribution to a traditional IRA?

Sorry. I should have included that, yes we have earned income. Self employment.

MaryK1101
Expert Alumni

Why is TT telling me I do not qualify for a credit if I make a contribution to a traditional IRA?

Your deduction is limited to your net self-employment income.

@hankster12330

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