topic TurboTax is showing the incorrect MAGI cap that affects my Traditional IRA deductions in Deductions & credits

TurboTax is showing the incorrect MAGI cap that affects my Traditional IRA deductions

joshmc83 — Tue, 30 Mar 2021 20:11:39 GMT

The MAGI cap for a couple married filing jointly where only one spouse is covered by a retirement plan at work is $206,000. This was reflected correctly in my filing and is stated so on Turbo Tax's own website. However, my spouse received a 1099-NEC, and we had to readjust her income. We are still nowhere near the $206,000 cap, but we ARE above the $124,000 cap, which is only if BOTH spouses are covered by a retirement plan. Now I cannot even submit my amended returns without TurboTax saying I owe more money. This is inconsistent, and I believe a flaw in the software. It's also therefore not counting my previous traditional IRA deductions nor deductions I wish to make for FY 2020 to avoid paying more taxes.

I tried to report this and Turbo Tax support referred me to a specialist and then asked for more money in an automated system. I don't need a specialist. I need you to update your software or issue me a refund.

Re: TurboTax is showing the incorrect MAGI cap that affects my Traditional IRA deductions

SweetieJean — Tue, 30 Mar 2021 22:18:33 GMT

Go back and be sure you answered the questions re who was covered by a retirement plan correctly, and that you assigned all W-2 and 1099-NEC forms to the right person. Also see this:

Worksheet 1-1.Figuring Your Modified AGI

Use this worksheet to figure your modified AGI for traditional IRA purposes.

1.	Enter your adjusted gross income (AGI) from Form 1040, 1040-SR, or Form 1040-NR, line 11, figured without taking into account the amount from Schedule 1 (Form 1040), line 19	1.	_____
2.	Enter any student loan interest deduction from Schedule 1 (Form 1040), line 20	2.	_____
3.	Enter any tuition and fees deduction from Schedule 1 (Form 1040), line 21	3.	_____
4.	Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45	4.	_____
5.	Enter any foreign housing deduction from Form 2555, line 50	5.	_____
6.	Enter any excludable savings bond interest from Form 8815, line 14	6.	_____
7.	Enter any excluded employer-provided adoption benefits from Form 8839, line 28	7.	_____
8.	Add lines 1 through 7. This is your Modified AGI for traditional IRA purposes	8.	_____

Re: TurboTax is showing the incorrect MAGI cap that affects my Traditional IRA deductions

joshmc83 — Thu, 01 Apr 2021 15:17:27 GMT

Thanks. I answered the retirement plan questions correctly, and that is reflected with the deductions shown in my tax return. However, the products specialist team confirmed now the system thinks I have a retirement plan, too, when I try to amend, even though I do not have that box checked. This is a TurboTax error that is being investigated. Get it together TT!

Re: TurboTax is showing the incorrect MAGI cap that affects my Traditional IRA deductions

dmertz — Fri, 02 Apr 2021 15:27:47 GMT

Your question misstates the limits. The $124,000 limit applies to the individual who is covered by a workplace retirement plan regardless of whether that individual's spouse is covered by one. When only one spouse is covered by a workplace retirement plan, only the spouse who is not covered gets the $206,000 MAGI limit.

Re: TurboTax is showing the incorrect MAGI cap that affects my Traditional IRA deductions

joshmc83 — Fri, 02 Apr 2021 15:51:13 GMT

That is not what the IRS site shows: https://www.irs.gov/retirement-plans/plan-participant-employee/2020-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-not-covered-by-a-retirement-plan-at-work

where do you have documentation of that?

Re: TurboTax is showing the incorrect MAGI cap that affects my Traditional IRA deductions

dmertz — Fri, 02 Apr 2021 16:04:37 GMT

The page you referenced is for the individual who is not covered by a workplace retirement plan.

The following reference is the page that is for the individual who is covered by a workplace retirement plan. You'll notice that it makes no reference to the individual's spouse:

https://www.irs.gov/retirement-plans/plan-participant-employee/2020-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work