TT Deluxe 2023 doesn’t allow traditional Ira deduction for MAGI less than 218,000

[Cappy2112]

Is anyone else having a problem with TY deluxe 2023 for a traditional IRA contribution?

Our MAGI is less than $218,000, we are married filing jointly, one person is covered through their work for a retirement plan, the other is not.

According to the IRS publication, we should be able to get a FULL deduction for a Traditional IRA contribution ($7500 for 2023).

thanks

[DoninGA]

IRA deduction limits for 2023 if you have a retirement plan at work - https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-i...

[dmertz]

Only the spouse who is not covered by the workplace retirement plan begins the deduction phase-out at $218,00 of MAGI for the purpose.  For the spouse who is covered by the workplace retirement plan, the phase-out (for 2023) of the deduction for a traditional IRA contribution begins at $116,000 of MAGI and is fully phased-out at $136,000 of MAGI.

[Cappy2112]

I know this.

The spouse who is not covered by a retirement plan is the one who is trying to make the deduction.

We are married filing jointly, the AGI < $218,000 but TT will not let us deduct the IRA contribution.

The other person is covered under a workplace retirement plan, which is that W2.

[Cappy2112]

I see what the problem is. I’ve looked at the worksheet for the IRa deductions and the IRa these do not look right to me, based on the IRS regulations for IRA contributions.

[Cappy2112]

Thanks. TT is so frustrating, it is making decisions based on MAGI but does not show you what your MAGI is. From what we have seen none of the cases listed under MAGI appply to us.

TT needs to show the user how it calculates MAGI.

[jammer223]

I am also having this issue. There is a box checked on the IRA Deduction Worksheet (go to forms then look for the IRA Worksheet on the side bar). Box 1 has both Your and Spouse's is covered by a retirement plan at work checked. Can not uncheck the box or find the source for the box to get it unchecked. 

Also your MAGI for this form (it varies by worksheet) is line 6.

[dmertz]

Automatic marking of the workplace retirement plan box on the IRS Contribution Worksheet comes from the entries in box 12 or box 13 of TurboTax's W-2 forms or entries on the Keogh, SEP and SIMPLE Contribution Worksheet.

[Cappy2112]

thanks. But is this correct?

I have a 401k through my employer, the IRA worksheet shows it as an IRA.

It also shows the max contribution is $7500, which is for an IRA, not for a 401K.

My 401K contributions are clearly indicated in my W2.

It seems like TT just gets worse year after year.

[Cappy2112]

I think you CAN change anything that TT enters, but you have to RIGHT CLICK and select Override.

However, when you do this- you risk making a change that could be wrong, costing you money and penalties years down the road when the IRS finally gets around to it.

[Cappy2112]

thanks- I've read this many times

[SusanY1]

It sounds like there may be an issue in the entry area for the contribution and that TurboTax thinks it was made by the spouse that was covered, and not the uncovered spouse.  

Return to this section of the program and remove the current entries.  Then delete the retirement contribution worksheet using the delete function shown at the bottom of the workshett. 

Finally, return to the entry section and re-enter the contribution for the spouse.  If this doesn't allow the contribution and resolve the issue please let us know so that we can assist in additional troubleshooting.  

@Cappy2112 

[Cappy2112]

Thanks SusanY1

https://www.irs.gov/retirement-plans/2023-ira-deduction-limits-effect-of-modified-agi-on-deduction-i...

This link, as well as the worksheets in TT refer to "YOU", as well as "YOUR SPOUSE"

How do I know which person (husband or wife) is referred to by "YOU", the same goes for  "YOUR SPOUSE".

Both of us could read that and assume that "YOU" is the person reading it, which is not correct.

TT needs to make a distinction.

One of us IS covered by a 401K at an employer, the other one is not. But which is "YOU", which is "YOUR SPOUSE" as far as TT is concerned?

[SusanY1]

In TurboTax the person listed first on the return and in the "My Information" section is "You" and the person listed second is "spouse".  

Since you noted that there was $7500 listed on an IRA for you (rather than your 401k contribution amount) this made me think the program is considering that to be the contribution for the same person who has the 401k. 

Sometimes in these sections, if we return to them frequently, things can get "stuck" which is why I recommend deleting everything (in that section of the program only) before starting re-entering.  

When you go back through with the clarification of which person the program means for "you" and for "spouse" hopefully that will help guide you through!