topic Re: IRA Contributions in Retirement tax questions

IRA Contributions

ford_168_46790 — Wed, 17 Mar 2021 00:27:52 GMT

Hi, married filing joint, husband is covered by 401(k), MAGI is too high (>200K) to get a deduction, both 50+, wife not working and is SS recipient. Seems we can't get a deduction on regular (or ROTH?) IRA contributions. Can we still make the 7,000 each contribution regular IRA for 2020 and 2021 even if we can't deduct it?

Re: IRA Contributions

MaryK4 — Wed, 17 Mar 2021 00:43:29 GMT

Yes, you can make the contributions to a traditional IRA. If you cannot deduct the amount, it will be part of your basis and not taxed when you take it out of the account. You must file Form 8606 to report nondeductible contributions- TurboTax will do this for you.

Re: IRA Contributions

ford_168_46790 — Wed, 17 Mar 2021 01:13:16 GMT

Thanks, And can we each contribute the $7K max for both years?

Re: IRA Contributions

DawnC — Wed, 17 Mar 2021 01:23:31 GMT

Yes, but you only report the contributions for 2020 on this tax return. Your 2021 contributions will go on next year's tax return. For 2020 and 2021, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

$6,000 ($7,000 if you're age 50 or older), or
If less, your taxable compensation for the year

Your traditional IRA contributions may be tax-deductible. The deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels.

IRA deduction limits

Roth IRA contribution limit

In addition to the general contribution limit that applies to both Roth and traditional IRAs, your Roth IRA contribution may be limited based on your filing status and income.