W-4 Forms

IRA Deduction Calculator

The IRA deduction has an income threshold that you should know before thinking that you can just take the deduction on 2021 Schedule 1. The contributions made to a traditional IRA or other qualifying plan is deductible.

On the other hand, if you have a Roth IRA, you can’t deduct your contributions since you’re paying tax on them. Why you can’t deduct Roth IRA contributions is because of how they’re funded. When you contribute to a traditional IRA, you fund your retirement account with pre-tax dollars – meaning that you’ll pay taxes later. This qualifies for a deduction.

If you have a traditional IRA, here are the income thresholds.

Before taking a look at the income thresholds, whether or not you’re covered by a retirement plan at work determines if you qualify for a deduction. If you can deduct IRA contributions, you may also get a partial deduction. So you may not be able to get to deduct all of your contributions.

Take the IRA Deduction calculator for the current tax year and see what portion of your contributions can be deducted.

MAGI limits if you’re covered by a retirement plan at work

FILING STATUSMODIFIED ADJUSTED GROSS INCOMEELIGIBLE FOR
Single or Head of HouseholdLess than $65,000
$65,001 to $75,000
$75,001 or more
Full Deduction
Partial Deduction
No Deduction
Married Filing Jointly or Qualifying Widow(er)Less than $104,000
$104,000 to $124,000
$124,001 or more
Full Deduction
Partial Deduction
No Deduction
Married Filing SeparatelyLess than $10,000
$10,001 or more
Partial Deduction
No Deduction

MAGI limits if you’re not covered by retirement plan at work

If you’re not covered by a retirement plan at work, and your filing status is other than married filing separately, there is no MAGI limit. You can simply go ahead and deduct all of your contributions.

However, if you’re married filing jointly and your spouse is covered by a retirement plan at work, here is the MAGI limits that you should know.

Married Filing Jointly with a spouse who is covered by a retirement plan at workQualified Deduction
$0 – $198,000Full Deduction
$198,000 – $208,000Partial Deduction
$208,000 or moreNo Deduction

On the other hand, those who file a separate return can claim a partial deduction if MAGI is under $10,000. If over though, IRA deduction phases out completely.

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