Traditional IRA Deduction Limits

Deductibility of traditional IRA contributions depends on whether or not you are covered by another qualified plan.

Traditional Individual Retirement Accounts (IRAs) are subject to limits on the amount you can deduct on your tax return. Deduction limits depend on adjusted gross income, filing status, and whether you or your spouse are covered by a qualified plan through work. Deductibility phases out across an income range.

Contribution limits

You cannot contribute more than your income to a traditional IRA. For the 2009 tax year you can contribute up to $5,000 to a traditional IRA, up to $6,000 if you are age 50 or older.

Single or Head of Household With Retirement Plan at Work

If your tax filing status is single or head of household and you are covered under a retirement plan at work, you can take a full traditional IRA deduction if your adjusted gross income is $55,000 or less for the 2009 tax year. If your adjusted gross income is between $55,000 and $65,000, you can take a partial deduction; the phaseout is linear across the income range. For example, if your adjusted gross income is $60,000, your deduction is reduced to 50 percent of the available deduction. If your AGI is over $65,000, you cannot take a deduction for contribution to a traditional IRA. These limits will change to $56,000 and $66,000, respectively, for the 2010 tax year.

Married Filing Jointly With Retirement Plan at Work

If your tax filing status is married filing jointly and you are covered by a retirement plan at work, you can take a full traditional IRA deduction if your AGI is $89,000 or less for the 2009 tax year. The deductibility phases out between $89,000 and $109,000. If your AGI is $109,000 or more, you cannot take a deduction for contribution to a traditional IRA. These limits will stay at $89,000 and $109,000 for the 2010 tax year.

Single or Head of Household With No Retirement Plan at Work

If your tax filing status is single or head of household and you are not covered by a retirement plan through work, you can take a full deduction for contribution to a traditional IRA.

Married Filing Jointly With No Retirement Plan at Work

If your 2009 tax filing status is married filing jointly and neither you nor your spouse have a retirement plan through work, you may take a full deduction for contribution to a traditional IRA. If your spouse is covered by a qualified plan through work, you can take a full deduction if your AGI is $166,000 or less. The deductibility phases out between AGI of $166,000 and $176,000. If your AGI is over $176,000, you cannot take a deduction for a contribution to a traditional IRA. These limits will change to $167,000 and $177,000, respectively, for the 2010 tax year.

Married Filing Separately

If your tax status is married filing separately, you cannot take a deduction for contribution to a traditional IRA if your AGI exceeds $10,000. Deductibility is phased out between $0 and $10,000. These limits will remain the same for the 2010 tax year. If you did not live with your spouse at any time during the year you can file as single, and take advantage of the higher deduction.

References

• IRS Publication 590: Individual Retirement Arrangements