Income Limits
All United States taxpayers can make IRA deposits and defer the taxation of earnings. However, as explained below, the deposits are not deductible from income under certain circumstances. Accordingly, traditional IRAs are sometimes referred to as either "deductible" or "non-deductible."
If a taxpayer's household is covered by one or more employer-sponsored retirement plans, then the deductibility of traditional IRA contributions are phased out as specified income levels are reached (Modified Adjusted Gross Income is between).
| Year | Married Filing Jointly or Qualified Widow | Married Filing Jointly (and you were not covered by an employee-sponsored retirement plan but your spouse was) | Single, Head of Household or Married Filing Separately (and you did not live with your spouse) | Married Filing Separately (and you lived with your spouse at any time during the year) |
|---|---|---|---|---|
| 2007 | $83,000 and $103,000 | $156,000 and $166,000 | $52,000 and $62,000 | $0 and $10,000 |
| 2008 | $85,000 and $105,000 | $159,000 and $169,000 | $53,000 and $63,000 | $0 and $10,000 |
| 2009 | $89,000 and $109,000 | $166,000 and $176,000 | $55,000 and $65,000 | $0 and $10,000 |
| 2010 | $89,000 and $109,000 | $167,000 and $177,000 | $56,000 and $66,000 | $0 and $10,000 |
| 2011 | $90,000 and $110,000 | $169,000 and $179,000 | $56,000 and $66,000 | $0 and $10,000 |
The lower number represents the point at which the taxpayer is still allowed to deduct the entire maximum yearly contribution. The upper number is the point as of which the taxpayer is no longer allowed to deduct at all. The deduction is reduced proportionally for taxpayers in the range. Note that people who are married and lived together, but who file separately, are only allowed to deduct a relatively small amount.
To be eligible, you must meet the earned income minimum requirement. In order to make a contribution, you must have taxable compensation (not taxable income from investments). If you make only $2000 in taxable compensation, your maximum IRA contribution is $2000.
Read more about this topic: Traditional IRA
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