 | Traditional IRA: How Much Can You Contribute and Deduct in 2011?
If you are married, use this worksheet twice, once for you
and once for your spouse. See Quick Summary Step One: How Much Can You Contribute
to a Traditional IRA? You need to know how much you can contribute to a
traditional IRA before you calculate how much you can deduct.
The amount that you can contribute to a traditional IRA depends
on the amount of taxable compensation that you (and, in some
cases, your spouse) had for the year. All, part, or none of
your traditional IRA contribution may be tax deductible on your
federal income tax return. Go to Step One Step Two : How Much Can You Deduct? The amount of your federal income tax deduction depends on a
number of factors, including whether you or your spouse is
covered by an employer-sponsored retirement plan (e.g., a
401(k) plan), your income tax filing status for the year of the
contribution, and your modified adjusted gross income for that
same year. The amount that you can deduct represents the first
dollars that you contribute to your traditional IRA. If you
choose to contribute more (up to your maximum allowed
contribution from Step One), these additional dollars would be
treated as a nondeductible contribution. For example, you determine that you can contribute up to
$5,000 to a traditional IRA, but can deduct only up to $500.
You may contribute $500 to a traditional IRA and deduct the
full amount. If you contribute $5,000 to the traditional IRA,
you can deduct $500, and the remaining $4,500 will be
considered a nondeductible contribution. Go to Step Two Quick Summary If you are covered by an employer-sponsored retirement plan,
the amount of tax-deductible contribution you can make to a
traditional IRA (if any) depends on your modified adjusted
gross income (MAGI) and federal income tax filing status for
the year in which you contribute (see table below): | If your filing status is (see notes
1-3 below): | Your traditional IRA deduction is
reduced if your MAGI is between: | Your traditional IRA deduction is
eliminated if your MAGI is: | | Single or head of household | $56,000 -
$66,000 | $66,000 or
more | | Married filing jointly, or
qualifying widow(er) | $90,000 -
$110,000 | $110,000 or
more | | Married filing separately | $0 -
$10,000 | $10,000 or
more |
- Generally, if you haven't reached age 70½ by the end
of the tax year, you can contribute up to $5,000 a year to a
traditional IRA if you have at least that much in taxable
compensation for the year. In addition, if you are 50 or
older, you can contribute an additional $1,000 as a "catch-up"
contribution.
- Generally, if neither you nor your spouse is covered by
an employer-sponsored retirement plan, the full amount of
your traditional IRA contribution is tax deductible on your
federal income tax return.
- Certain low- and middle-income taxpayers may also be
eligible for a partial income tax credit for contributing to
an IRA (traditional or Roth). If you qualify for such a
credit, it is in addition to any income tax deduction you
might receive for making the contribution. See
Tax Credit for IRAs and Retirement Plans
for more information.
- If any of the following apply, this summary is inadequate
and you'll need to work through Step One and Step Two of
this worksheet (see above) to determine the amounts that you
can contribute and/or deduct:
- You do not have at least $5,000 ($6,000 if age 50
or older) in taxable compensation
for the year.
- You are covered by an employer-sponsored retirement
plan during the year of the contribution, and your MAGI
falls within the applicable range listed in the middle
column of the above table.
- You are not covered by an employer-sponsored retirement
plan during the year of the contribution, but your spouse
is covered by such a plan.
Note: Special rules may apply to repayments of qualified reservist distributions, and repayment of distributions by certain victims of presidentially declared natural disasters. | |