Tradtional IRA should be nondeductible - but TT says it is

[Sinclair12]

Hi- using TT Deluxe desktop Windows. Married filing separately. Receiving pension, investment income, and earned income that put MAGI above the $10,000 limit (for married filing separately) above which a traditional IRA contribution is not deductible. But TT Deluxe says my traditional IRA contribution *is* deductible! Why?

I know I can simply tell TT to make it nondeductible, but I want to understand why TT even thinks this is an option when it should not be. Thanks!

[MinhT1 · Accepted solution]

It depends on whether your spouse is or is not covered by a retirement plan at work.

The $10,000 MAGI limit applies when your spouse is covered by a retirement plan.

If your spouse is not covered by a retirement at work, there is no MAGI limit.

Please read this IRS document for more information.

[Sinclair12]

Thanks! Update: I had originally told TT to make this contribution nondeductible even though it could be deducted. Later, I learned that my wife briefly *was* covered by a retirement plan in 2022, so I deleted all the IRA information and started over. This time, with the changed info about my wife, TT correctly told me that the contribution was nondeductible. However, during Federal review this kept coming up as an error. It turns out that, despite the old entries supposedly being deleted, TT retained my original decision to make the contribution nondeductible -- TT had this contribution as being nondeductible AND, in addition, had the contribution amount on ANOTHER line in the worksheet as showing I had "chosen" to make it nondeductible. As soon as I deleted the amount on that second line, the problem went away.

Lesson: if you change some of the IRA contribution information, TT may retain some of the old info and give you an error. Hope this is helpful to someone.