IRA deduction for Married Filing Separately but lived apart all year

[lisa986]

As I understand it,  if you are Married Filing Separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the "single" filing status.  Under the single status, you can deduct your whole contribution no matter what your MAGI is (assuming you have enough earned income to cover it). My income is over $100k.

In TurboTax Premier Desktop, I've gone over the personal info section multiple times. It all looks correct and the info worksheet is ok - it has the box checked indicating that we lived apart all year. However, TurboTax is telling me that my $7000 IRA contribution is not deductible. On schedule 1,  line 20, "If you are married filing separately and lived apart from your spouse for the entire year" is not checked and the amount of the IRA deduction is blank. Similarly, on the 1040 form, line 6d, the "lived apart all year" box is not checked. 

How can I fix this??

[dmertz]

"Under the single status, you can deduct your whole contribution no matter what your MAGI is (assuming you have enough earned income to cover it)."

That's incorrect.  Your MAGI is irrelevant for this purpose only if you (and your spouse if you are not considered Single for this purpose) are not covered by a workplace retirement plan, the same as for any other filing status.  If you are covered by a workplace retirement plan for 2025, you are Married Filing Separately and you lived apart the entire year, the deduction for a traditional IRA contribution made for 2025 phases out between $79,000 and $89,000 of MAGI.

[lisa986]

I should have added that I do not have access to a workplace retirement plan.

(My wife does, but we are living apart in different states and filing separately.)

[dmertz · Accepted solution]

If the deduction for your traditional IRA contribution is not appearing on Schedule 1 line 20:

1. Make sure that you have compensation from working (making a traditional IRA contribution requires compensation; you are not permitted to deduct a contribution that you are not permitted to make).
2. Check on the IRA Information Worksheet that box 3 (Married Filing Separately) under Federal filing status is marked and that the box to indicate that you lived apart all year is marked.
3. On the IRA Contribution Worksheet make sure that the box on line 10 for Taxpayer is not marked.
4. If the box on line 10 is marked and you are unable to unmark it, it would seem that you have either a self-employed retirement deduction, box 13 Retirement plan is marked on a W-2, or in box 12 of a W-2 you have entered a code that reports contributions to a retirement plan.

[lisa986]

Thanks for all those things to check!

On the IRA Contribution Worksheet, line 10 is checked (incorrectly). I work temporary W-2 and 1099 jobs, so have no access to a workplace retirement account. 
I bet the problem is due to the fact that I entered a self-employeed health insurance deduction before I realized that I should ONLY enter the premiums in the ACA insurance section and check that I was self-employed.  I removed the deduction, but something is probably left over from that.   

The W-2's look ok.

[PatriciaV]

Your best option is to delete the IRA Contribution Worksheet using Forms Mode. Save your return and close TurboTax Desktop to reset your status. Then re-start TurboTax and open your return. See if you can enter your IRA contributions without an error now.

[dmertz · Accepted solution]

Nothing about self-employed health insurance has any bearing on your eligibility to make or deduct a traditional IRA contribution.

If your W-2 has box 13 Retirement plan marked, that employer is indicating that you are covered by a workplace retirement plan.  If you made a contribution to a self-employed retirement plan, entered on the Keogh, SEP and SIMPLE Contributions Worksheet, you are covered.  Either of these forces the box on line 10 of the IRA Contributions Worksheet to be marked.

Check for anything on Form 5329 that suggests an excess IRA contribution.

[lisa986]

Tried deleting the IRA Contribution Worksheet and re-entering the IRA contribution but that didn't help. It still says  

Based on what you've entered you don't qualify for an IRA deduction.

[lisa986]

@dmertz - Sorry, don't know why I read your post as mentioning the self-employed health insurance deduction when you were talking about self-employed retirement.   I DID make a contribution to my own SEP IRA (not one provided by any employer).  I didn't know that that counts as a "workplace retirement plan"! 

Info I found:

If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the "single" filing status.

Single – your MAGI can be anything and you can deduct the full amount, IF you are not covered by a retirement plan at work **

Single but covered by a workplace retirement plan - phaseout starts at $79k, no deduction after $89k.

** Your own SEP IRA counts as a workplace retirement plan (or "employer-sponsored plan") for tax purposes, even if you are self-employed. According to the IRS, participating in a SEP IRA means you are considered covered by a retirement plan at work, which may limit the deductibility of contributions to a separate, traditional IRA.

You can still contribute to an IRA, but you can't deduct it.

Aggravating, but I understand now.