IRA contributions non-deductible, although I have NO retirement plan at work

[mwaadams]

I hope I haven't run into a glitch in TurboTax: my AGI is over 200 thousand, but I do NOT have a retirement plan at work, and according to everything I've read, I should be able to deduct my entire contribution (8k, as I'm over 55).  However, my TurboTax is telling me that I may not take any deduction.

Is anyone else running into this?

[MindyB]

If you do not have a retirement plan at work, you should be able to deduct your IRA contribution in full. (Make sure you answer that no, you did not have retirement plan coverage when entering your IRA contribution in TurboTax). ‌

However, if you are married and your spouse has a retirement plan at work, you may not take the deduction if your modified AGI is over $240,000.

See: IRA deduction limits

[mwaadams]

Thank you, Mindy, but for some reason TurboTax believes I'm covered by a pension at work.  I am overseas, so do not receive a W2 (and have not entered one), so I'm not sure where TurboTax got this idea.  And this is the first time after many years overseas and using TurboTax that this problem has arisen.  I've tried going into the Forms and unticking the boxes, but the program won't allow it...

[KeshaH]

If you'd like, we can look at your return and see exactly what you see to  help come to a resolution. The return will be scrubbed and won't include any of your personal details.

If you're using TurboTax Online:

Once you're logged in to your account,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

If you're using TurboTax Desktop:

• Click on Online in the top menu of TurboTax Desktop for Windows
• Select 'Send Tax File to Agent'
• Write down or send an image of your token number and state then place in this issue.
• We can then review your exact scenario for a solution

Please reply to this message with your token so that we can further assist you. Let us know all other states, if any, that are included on the return.

[mwaadams]

Token: 17135141-17777453

[ThomasM125]

Especially since you mention you do not have a W-2 form, it is possible you don't have any earned income. If so, you would not qualify for an IRA contribution. You would need earned income for that, such as wage or self-employment income.

[mwaadams]

US citizens who work overseas for foreign companies do not receive W2's, just FYI.

[SusanY1]

Thank you for sharing the tax data file.  I have identified that the data about being covered by a plan at work is coming from information on the Keogh, SEP, SIMPLE Contribution worksheet which shows contributions made to a Traditional SEP for both taxpayer and spouse of $50,000 each.  

This appears to be in error (unless the data for the self-employed income is just not yet complete). If it is in error, removing the form will resolve this issue. 

To remove it, switch to the Forms mode by clicking on the forms icon across the top of your screen. Look for the Keogh/SEP Wks in the list of forms on the left and click Delete (or remove, for Mac).

After deleting, walk back through the interview questions in the section for your IRA contributions.  This will then allow the deduction on your Traditional IRA contributions.  You will then be asked if either you or your spouse are covered at work, and once you say no to that question you'll see the option to fully deduct your contributions.  

If you are, in fact, making SEP contributions, then you won't be eligible to deduct traditional IRA contributions as SEP plans contributions are considered "covered at work".  

[mwaadams]

Many thanks, this fixed it.