Traditional IRA and non working spouse
Dear Ed,
Great forum! Great resource! Thanks!
My confusion results from being nearly certain that I previously came across an IRA publication that stated you could not open and receive a deduction for a Traditional IRA if you were married filing jointly and had no income that year.
My situation is this; I am employed with an AGI of 100,798 for 2007. My spouse had no income for 2007. While completing my taxes with Turbo Tax it seems if I enter 4000 for my wife’s Traditional IRA my refund increases by 600. Prior to this I was going to put 4000 in a Roth for her before filing to use my allowable amount for 2007. So in reviewing IRA Publication 590 I find nothing that confirms my previous recollection. So am I OK in opening a Traditional IRA in her name and then receiving the deduction, which apparently provides us with a 600.00 increase in our return.
Joe : 😀
Permalink Submitted by Alan Spross on Tue, 2008-04-01 03:32
Joe,
Yes, making that spousal traditional IRA contribution for her using some of your earned income provides a deduction because your joint modified AGI is well below the phase out range for the deduction for a non working spouse. The chart showing this is in Pub 590, p 16, Table 1-3.
If you personally are covered by a retirement plan, you are near the top of the phase out range to deduct your own contribution, but you could make your contribution to a Roth IRA.