Can I claim non-working spouse IRA contribution on a state return we are not residents of but own rental property (that is income generating)? Spouse doesn't work so we can contribute $6000 to her IRA and get a write off. We have an income generating rental property in CA. We live in TN. Can we claim this deduction in our state tax return to offset the income so we don't have to pay CA state taxes? Turbotax is letting me do that, but I don't know if its legal.
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Per IRS IRA FAQs - Contributions if you file a joint return and have taxable compensation, you and your spouse can both contribute to your own separate IRAs.
Your rental income is considered Passive Income and not taxable compensation.
You need to have sufficient income from wages on your return to be able to make an IRA contribution for you or for your spouse.
My question has more to do with whether or not i can claim my $6000 IRA deduction in my california state taxes. Turbo tax is letting me do that and it offsets any taxes I owe to California so that I owe none. I am not a resident of california but i do have rental income from a california property. Can i claim the IRA deduction (or part of it) as "california portion"?
No.
While this answer does not specifically answer your question, because no one has probably never thought to ask this before, it answers it in spirit.
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