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Traditional IRA

My friend AGI for 2021 was around $120,000, filed married jointly. His age 72  & work, her age 62, she receive disability  & pension income. They have contributed $14,000 to traditional IRA for 2021. When I entered the amount on Turbotax for both only husband received some deduction wife did not, Turbotax did not registered wife any deduction.  We e-filed the return, it was accepted  but now they receive a letter from  IRS regarding not inclusion of her IRA contribution. It is her unearned income caused Turbotax to exclude or AGI or others. Now should we amend the return & paper mail?? Thank You!

2 Replies

Traditional IRA

Since the husband had enough income to make his IRA contribution AND a spousal IRA contribution why did you file a return that did not show them both ?   Was a form 8606 in the return for the non-deductible spouse contribution ?   Did you enter the entire amount under his name only ?    If so did the program tell you that was an excess contribution and that you would remove it ?  

 

What tax year was this for ?   It seems way too early for a 2021 letter.  So what exactly does the IRS mention since what you wrote is not mailing sense ... did you try calling the number on the notice for more details. 

Traditional IRA

his allowable IRA deduction can be affected by being covered by an employer-sponsored retirement plan. There is a phaseout if your modified AGI is over $105,000 and you are covered by an employer plan.  in addition, if his spouse is a social security recipient, a portion may need to be added back to arrive at modified AGI. since you're already at $120K of AGI, there could be a complete phase-out of deductible IRA contribution for him.

 

however, the spouse, since apparently not covered by an employer retirement plan, may be allowed a deduction. Spousal IRA rule - provided a joint return is filed. the lower-earning spouse  (even if no earned income) can consider the other's earned income to the extent it was not been taken into account in making an IRA contribution for the higher-earning spouse

 

 

 

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