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mylovesue
New Member

Why was I only able to deduct ~$4,040.00 out of $6,500 on my wife's traditional IRA? Also, will I be able to forward & deduct difference on next years 2018 taxes?

 
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KarenJ
Intuit Alumni

Why was I only able to deduct ~$4,040.00 out of $6,500 on my wife's traditional IRA? Also, will I be able to forward & deduct difference on next years 2018 taxes?

2017 Traditional IRA contributions may be limited if you or your spouse are covered by a retirement plan at work. 
 
Please see the following for Table to use if you are covered by a retirement plan at work:
 
 
 
 
 
You will not need to pay tax when withdrawn on the amount of your wife's IRA that was not deductible. You will need to keep track of the nondeductible contributions.  
 
 
You have a cost basis in your traditional IRA if you made any nondeductible contributions.  For example, if your wife's only IRA contributions were $6,500 when she retired and she withdrew this amount in retirement, she would only pay tax on the $4,040 plus earnings.  She would not pay tax on the balance ($2,460) as she was already taxed on that part.

Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions."  [From:  IRS Publication 590-A] 

The following form from the same publication will give you a summary sheet to track non-deductible IRA's.  [Appendix A, Page 52]  https://www.irs.gov/pub/irs-pdf/p590a.pdf

Form 8606 should also track your nondeductible contributions.

 

 
 
 
 

 

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1 Reply
KarenJ
Intuit Alumni

Why was I only able to deduct ~$4,040.00 out of $6,500 on my wife's traditional IRA? Also, will I be able to forward & deduct difference on next years 2018 taxes?

2017 Traditional IRA contributions may be limited if you or your spouse are covered by a retirement plan at work. 
 
Please see the following for Table to use if you are covered by a retirement plan at work:
 
 
 
 
 
You will not need to pay tax when withdrawn on the amount of your wife's IRA that was not deductible. You will need to keep track of the nondeductible contributions.  
 
 
You have a cost basis in your traditional IRA if you made any nondeductible contributions.  For example, if your wife's only IRA contributions were $6,500 when she retired and she withdrew this amount in retirement, she would only pay tax on the $4,040 plus earnings.  She would not pay tax on the balance ($2,460) as she was already taxed on that part.

Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions."  [From:  IRS Publication 590-A] 

The following form from the same publication will give you a summary sheet to track non-deductible IRA's.  [Appendix A, Page 52]  https://www.irs.gov/pub/irs-pdf/p590a.pdf

Form 8606 should also track your nondeductible contributions.

 

 
 
 
 

 

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