IRA Deduction

[pembsha]

Is there anyone out there that can help me with why I can't get a spousal IRA deduction for my 2025 taxes.  Wife works and has 401K plan, husband does not.  MAGI is well under $246,000  so why is the program saying it is not allowed or even deductible.  Thanks

[JohnB5677]

There may be other AGI limitations.

"Modified AGI limit for traditional IRA contributions.

For 2025, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is:

• More than $126,000 but less than $146,000 for a married couple filing a joint return or a qualifying surviving spouse,"

See IRS Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs)

Modified AGI limit for traditional IRA contributions

[dmertz]

I think that JohnB5677 misunderstood the circumstances.  His reply applies to Wife's eligibility to deduct a traditional IRA contribution, not to Husband's eligibility, assuming that husband is not an active participant in a workplace retirement plan (including a self-employed retirement plan).

As long as Husband's compensation is less and you file jointly, Husband should be able to make a spousal contribution and at least some of that contribution would be deductible if Husband is not an active participant in a workplace retirement plan and MAGI for this purpose is under $246,000.  Spousal contributions are not permitted if filing separately.

[Turbo1986]

Hi,

dmertz’s interpretation is correct, and we are experiencing the same issue described in the original post. TurboTax 2025 Deluxe does not allow any deductible IRA contribution for the non-working spouse when the working spouse is covered by a workplace retirement plan, even though our MAGI is well below $246,000 for married filing jointly.

It appears that the software is incorrectly treating both spouses as covered by a workplace retirement plan and therefore applying the lower MAGI phase-out range of $126,000–$146,000 for married filing jointly.

How does TurboTax plan to address this software issue, and what should we do in the meantime? Any guidance from TurboTax would be greatly appreciated. Thank you.

[dmertz]

I am unable to replicate this behavior.  With MAGI below the $246,000 threshold, at least some of the IRA contribution made by the spouse who is not covered by a workplace retirement plan is shown as deductible on Schedule 1.  (I'm assuming that Wife has sufficient compensation to support Husband's spousal contribution such that it is not an excess contribution.  Excess contributions are not deductible.)

I suggest reviewing TurboTax's IRA Contributions Worksheet line 10 to see who TurboTax believes is covered by a workplace retirement plan, particularly Husband.  In fact, review all of TurboTax's Additional Traditional IRA Contribution Information on this worksheet.  Also review line 21 of either the IRA Deduction Worksheet or the Social Security Recipients Who Contribute to a Traditional IRA Worksheet, whichever one is being used to calculate your MAGI for this purpose.

[Turbo1986]

Thank you very much for the guidance, I appreciate it! Surprisingly, the software allows me to enter the full contribution into Turbotax's IRA "contrib" worksheet instead, and the system accepts it.