How to Calculate Allowable Contributions to an IRA. Allowable contributions are defined as the specified amounts of money that you (or your employer) contribute to your individual retirement account, or IRA, as limited by the federal government. The IRS rules governing allowable contributions to an IRA are vast and varied. The contribution limits are different for every type of IRA and dependent on your taxable income and marital status.
Calculate allowable contributions to your SEP IRA. Ask your employer for a printout of your SEP IRA contributions. Only your employer can contribute to this type of IRA.
Total your annual compensation, including any bonuses and overtime you have received, to calculate your SEP IRA allowable contributions. Whether you are self-employed or your employer has set up a SEP IRA in your name, the maximum allowable contribution is the lesser of either 25 percent of your compensation or roughly $45,000.
Calculate the allowable contributions to your Roth IRA. Calculate your modified adjusted gross income (MAGI) to see if you fall within the income guidelines for contributing to your Roth IRA. This may change from year to year depending on your income and deductions. If you and your spouse together make less than $100,000 per year, you may both contribute the maximum amount of $2,000.
Make sure you can still contribute to your Roth IRA. The nature of the Roth IRA is that allowable contributions get smaller as your income gets larger. Use the phase-out chart found on websites like the Bank of America to determine allowable contributions if your annual income is higher than $100,000 (see Resources below).
Calculate allowable contributions to a traditional IRA. Figure your adjusted gross income (AGI), since the amount you can contribute varies depending on your AGI, tax filing status and age. The maximum allowable contribution for a single taxpayer is $4,000 per year. Married taxpayers may each contribute $4,000 annually, doubling the maximum allowance.
Use an online IRA calculator like the one found on Fidelity's website to determine exactly how much you may contribute and how much of that amount is tax deductible (see Resources below). Calculators of this sort are much more accurate than estimation, since they take into account all the factors considered by the IRS rules.
Calculate allowable contributions to a Coverdell ESA. Confirm that your income is within the guidelines for contributing to a Coverdell ESA. Anyone whose income is below $100,000 can contribute a maximum of $2,000 per year, per Coverdell ESA.
Contribute this amount to multiple accounts if you have accounts for more than one child.