topic How does TT determine 2020 IRA max contribution? Is there a worksheet it uses? in Deductions & credits

How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

RandyK — Sun, 14 Mar 2021 22:50:37 GMT

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

macuser_22 — Sun, 14 Mar 2021 22:52:31 GMT

It uses the taxable compensation that you enter.

The most you can contribute to all of your traditional and Roth IRAs is the smaller of:

For 2019 and 2020, $6,000, or $7,000 if you’re age 50 or older by the end of the year; or
your taxable compensation for the year.

(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, certain alimony and separate maintenance, and nontaxable combat pay ).

See IRS Pub 590A "What is compensation" for details:
https://www.irs.gov/publications/p590a#en_US_2020_publink1000230355

See this IRS article for Roth contribution limits:

https://www.irs.gov/retirement-plans/roth-iras

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

RandyK — Sun, 14 Mar 2021 22:58:23 GMT

Okay, but I need to see how the max number was derived specifically.

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

macuser_22 — Sun, 14 Mar 2021 23:02:13 GMT

@RandyK wrote:

Okay, but I need to see how the max number was derived specifically.

Mainly the 1040 line 1 amount plus the schedule 1 line 3 amount minus line 15 and 16.

But as the IRS says can also include commissions, certain alimony and separate maintenance, and nontaxable combat pay.

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

RandyK — Sun, 14 Mar 2021 23:17:06 GMT

My wife's TT determined max contribution amount is understandable. But mine isn't because I am disabled and my only sources of income is from SSA disability payments, my Gov't retirement pension, and no taxable interest, dividends, or capital gains. So I would think my max contribution determination would be 0. But TT comes up with $1,492 for me. I would like to see how this number is generated.

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

macuser_22 — Sun, 14 Mar 2021 23:26:32 GMT

@RandyK wrote:

My wife's TT determined max contribution amount is understandable. But mine isn't because I am disabled and my only sources of income is from SSA disability payments, my Gov't retirement pension, and no taxable interest, dividends, or capital gains. So I would think my max contribution determination would be 0. But TT comes up with $1,492 for me. I would like to see how this number is generated.

On a joint return it is the total joint taxable compensation reguardless of which spouse earned it, after the spouses IRA contribution is subtracted - what is left can fund a spousal IRA.

See Kay Bailey Hutchison Spousal IRA.

in IRS Pub 590-A.

https://www.irs.gov/publications/p590a#en_US_2020_publink1000230444

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

RandyK — Sun, 14 Mar 2021 23:48:08 GMT

Okay, terrific! We are getting closer to the number. But is there a worksheet or form that TT is using so I can see exactly how the number is being generated?

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

macuser_22 — Sun, 14 Mar 2021 23:59:43 GMT

No. It is simply adding the income I referred to. No worksheet is required.

Re: How does TT determine 2020 IRA max contribution? Is there a worksheet it uses?

RandyK — Mon, 15 Mar 2021 01:02:31 GMT

Okay! The numbers do work out, after an adjustment to income from Schedule 1. Thank you for solving the mystery!