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

[Avathar]

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.

[Avathar]

I am using Deluxe product online version.

[Avathar]

My spouse does not have any W-2 Form.

[DanaB27]

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.

[Avathar]

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]

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.

[Avathar]

@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]

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. 

[Avathar]

Thank you for the clarification.