Eligibility for Deductible Traditional IRA
I am 66, retired and receiving a pension from my prior company; my wife is self-employed. However, I worked part-time at another company with earned income in 2007. I was not covered by their retirement plan at this job.
My wife and I both contributed $5K to traditional IRAs and took a deduction on our federal taxes. Mine was disallowed.
Is this correct? Thanks.
Permalink Submitted by Alan Spross on Sat, 2008-06-07 20:12
No, there is an inconsistency between your facts and the IRS position. Did you get a W-2, and if so is the Retirement Plan checked in Box 13? Are you collecting SS?
Permalink Submitted by William Mihaltse on Sat, 2008-06-07 21:33
Alan, thanks for the feedback and questions. Yes, I did receive a W-2 and box 13 was not checked on the W-2 which supports my statement that the earned income was not covered by a retirement plan. Yes both my wife and I are collecting social security. One other piece of possibly relevant information: our AGI is over $150K with the $10K IRA deductions.
Permalink Submitted by Alan Spross on Sat, 2008-06-07 22:05
Well, if neither of you are covered by a plan, then neither SS benefits or modified AGI amount should be a factor, and the IRS appears incorrect. Other possibilities:
1) Something done in your tax filing that conflicts with the info returns
2) Spouse contributed to a SEP IRA but your SSN appeared in error on Sch C?
3) Your IRA contribution went into a Roth IRA instead?
Could be you will need to ask the IRS for a full explanation after you check out the above or any other related filing errors. Receipt of a pension from a former employer is not considered to be participation.
Permalink Submitted by William Mihaltse on Sat, 2008-06-07 22:42
Alan, Thanks. Yoiu have confirmed my thoughts and suggested the actions I have taken.