Your income is too high to contribute to Roth IRA

[My_dog_bites]

Something is wrong, income is 90,000 and the only contribution is to a Roth IRA (No TIRA)

Over 55, I contributed $7000.

"Your modified adjusted gross income is $90,000, which puts you over the current Roth limit of $10,000. That means the $7,000 you put into a Roth is considered an execss contribution."

I didn't enter any other IRA. I even went back a changed the contribution to $1 dollar and the same thing happened. 

I did the same thing last year without an issue.

Help.

Thank you.

JT

[Critter · Accepted solution]

Welcome to the limitations of the Married Filing Separately filing status ... 

Modified AGI limit for Roth IRA contributions. For 2019, your Roth IRA contribution limit is reduced (phased out) in the following situations.

• Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $193,000. You can’t make a Roth IRA contribution if your modified AGI is $203,000 or more.

• Your filing status is single, head of household, or married filing separately and you didn’t live with your spouse at any time in 2019 and your modified AGI is at least $122,000. You can’t make a Roth IRA contribution if your modified AGI is $137,000 or more.

• Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than zero. You can’t make a Roth IRA contribution if your modified AGI is $10,000 or more.

https://www.irs.gov/publications/p590a

[VolvoGirl]

And there are other limits too.

Unless you have a specific reason to file separate returns,

It is usually better to file Joint. Joint has the lowest tax rates and the highest Standard Deduction.   And if you are in a Community Property state MFS gets tricky to figure out.  Here's some things to consider about filing separately……

In the first place you each have to file a separate return, so that's two returns.  And if you are using the Online version that means using 2 accounts and paying the fees twice.  

Many people think they come out better when filing Married Filing Separate but they are probably doing it wrong.  If one person itemizes deductions then the other one must itemize too, even if it's less than the standard deduction, even if it is ZERO!  

And there are several credits you can't take when filing separately, like the

EITC Earned Income Tax Credit

Child Care Credit

Educational Deductions and Credits

And contributions to IRA and ROTH IRA are limited when you file MFS.

Also if you file Married Filing Separately up to 85`% of your Social Security becomes taxable right away even with zero other income.

See …….

https://ttlc.intuit.com/community/married/help/is-it-better-for-a-married-couple-to-file-jointly-or-...

[raisa_machado]

In the same situation. If the contributions have already been made - what should we do now?

[DawnC]

Remove them before May 17th.   Contact the IRA custodian and tell them that you have over-contributed and to return the funds to you.   They will return the contributions and the earnings on those contributions.    You will need to include the earnings portions on the 2020 tax return that you are filing now.   If you want to avoid the 6% penalty, remove the contribution and report the earnings before you submit your return.     @raisa_machado

[raisa_machado]

Thanks for the help!

[raisa_machado]

Thanks for the help