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Income too high for IRS deduction ? I do not have a retirement plan at work so there should not be a limit.

TurboTax is telling me my MAGI 145k is "over the limit" for IRA deductions "while being covered by a retirement plan", BUT I wasn't covered by a retirement plan in 2021. I do not see any interview questions asking about this. How do I get my deduction?

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1 Best answer

Accepted Solutions
DanaB27
Employee Tax Expert

Income too high for IRS deduction ? I do not have a retirement plan at work so there should not be a limit.

Please verify that your box 13 retirement on your W-2 entry wasn't accidently checked:

  1. Click on "Search" on the top right and type “W-2” 
  2. Click on “Jump to W-2”

 

If your W-2 wasn't the issue and you don't have any SEP entries then you should get the question during the traditional IRA contribution interview:

 

  1. Click on "Search" on the top right and type “IRA contributions” 
  2. Click on “Jump to IRA contributions"
  3. Select “traditional IRA
  4. Continue until you get the "Retirement Plan Coverage?" screen

 

 

You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a:

 

  • Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to your account for the plan year ending with or within the tax year;
     
  • IRA-based plan (SEP, SARSEP or SIMPLE IRA plan) and you had an amount contributed to your IRA for the plan year that ends with or within the tax year; or
     
  • Defined benefit plan (pension plan that pays a retirement benefit spelled out in the plan) and you are eligible to participate for the plan year ending with or within the tax year. (IRS)
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2 Replies
DanaB27
Employee Tax Expert

Income too high for IRS deduction ? I do not have a retirement plan at work so there should not be a limit.

Please verify that your box 13 retirement on your W-2 entry wasn't accidently checked:

  1. Click on "Search" on the top right and type “W-2” 
  2. Click on “Jump to W-2”

 

If your W-2 wasn't the issue and you don't have any SEP entries then you should get the question during the traditional IRA contribution interview:

 

  1. Click on "Search" on the top right and type “IRA contributions” 
  2. Click on “Jump to IRA contributions"
  3. Select “traditional IRA
  4. Continue until you get the "Retirement Plan Coverage?" screen

 

 

You’re covered by an employer retirement plan for a tax year if your employer (or your spouse’s employer) has a:

 

  • Defined contribution plan (profit-sharing, 401(k), stock bonus and money purchase pension plan) and any contributions or forfeitures were allocated to your account for the plan year ending with or within the tax year;
     
  • IRA-based plan (SEP, SARSEP or SIMPLE IRA plan) and you had an amount contributed to your IRA for the plan year that ends with or within the tax year; or
     
  • Defined benefit plan (pension plan that pays a retirement benefit spelled out in the plan) and you are eligible to participate for the plan year ending with or within the tax year. (IRS)
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Income too high for IRS deduction ? I do not have a retirement plan at work so there should not be a limit.

Thank you. The box was checked in my W-2 section, but not on the actual W-2.  Once I unchecked the box, the deduction went through.

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