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Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

Hello,

 

I am filing jointly with my spouse, and I am covered by my employer retirement plan but not my spouse. In deductions & Credits for IRA contributions, tax system is considering both are retirement plan covered (i.e  considering modified AGI limit of $109K limit not $204K)

 

Can you please clarify what could be the reason and fix? Thanks.

Link: 

Publication 590-A (2022), Contributions to Individual Retirement Arrangements (IRAs) | Internal Reve...

Modified AGI limit for certain married individuals.

 

If you are married and your spouse is covered by a retirement plan at work and you aren’t, and you live with your spouse or file a joint return, your deduction is phased out if your modified AGI is more than $204,000 (up from $198,000 for 2021) but less than $214,000 (up from $208,000 for 2021). If your modified AGI is $214,000 or more, you can’t take a deduction for contributions to a traditional IRA.

 

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8 Replies

Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

I am using Deluxe product online version.

Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

My spouse does not have any W-2 Form.

DanaB27
Expert Alumni

Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

If your wife doesn't have a W-2 she should have been asked if she was covered by a retirement plan at work during the IRA contribution interview. Make sure that you answered "No"

 

Please see Are You Covered by an Employer's Retirement Plan? for additional information.

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Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

Hello @DanaB27 ,

Thank you for your response. I checked IRA Deduction Worksheet.

Item 1 -> Check if covered by a retirement plan at work ->

(a) Your IRA is checked

(b) Spouse's IRA is not checked.

 

Question:

It seems system compares my AGI towards the ceiling of $129K  (11a) and combined AGI for $214K (11b). Is this the correct calculation? Should it not consider only the combined AGI for $214K ceiling?

 

Thanks.

DanaB27
Expert Alumni

Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

No, that is correct. Your limit will be $129k because you have a retirement plan at work and your spouse’s limit will be $214k because she is not covered by a retirement plan at work.

 

Please see IRA deduction limits for details.

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Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

@DanaB27 

Thanks for the quick response.

However I am still not clear. So let me ask my question for my specific case.

I worked and have retirement plan in 2022: My spouse did not work, so did not have retirement plan in 2022.

What does my MAGI need to be to get $12K full deduction? (Combined MAGI will be same since single earner)

What will be the MAGI to get partial deduction?

When will it be no deduction?

 

Thanks.

JulieS
Employee Tax Expert

Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

Your MAGI would need to be less than $109,000 to get a full IRA deduction, because you are covered by a retirement plan at work. 

 

If your MAGI were $109.000 to $129,000, you would get a partial deduction. 

 

If your MAGI were over $129,000, no IRA deduction would be allowed.

 

For your wife, your MAGI would need to be less than $204,000 to get a full IRA deduction, because she is not covered by a retirement plan at work.

 

If your MAGI were $204,000 to $214,000, she would get a partial deduction.

 

If your MAGI were over $214,000 no IRA deduction would be allowed for either of you. 

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Issue in Traditional IRA deduction calculation when filed jointly and one of the spouses not covered by a retirement plan

Thank you for the clarification.

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