Married people filing jointly have different rules than those who are married filing separately, or single filers. The maximum deduction is the same for everyone if they don't have another pension plan or their income falls under a specified amount. The difference is the amount of income each type of taxpayer can receive to make tax-deductible contributions to a traditional IRA.
No matter what your income, as of 2010, you can't put more than $5,000 into a traditional IRA unless you're over 50 and then the amount increases to $6,000. One other exception exists: if you worked for an employer, participated in a 401(k) for more than 6 months and the company went bankrupt, then you might be able to add another $3,000 if the employer matched your contributions with company stock.
Even if you don't earn an income, you can contribute to an IRA as long as your spouse had an income and you file jointly. If you're a stay-at-home dad or mom and your spouse is the breadwinner, you can make certain you have money for the future, too. If your spouse doesn't have a retirement plan and you're under 50, you both can deduct up to $5,000 -- up $6,000 if you're over 50. If your spouse has a retirement plan and your income is under $167,000, you can still deduct your IRA. After $167,000, it phases out and disappears at $177,000.
Income Contribution Limits
Even if you have a pension plan at work, you might be able to sneak another tax exemption in at the last minute if your income allows. Couples that earn under $89,000 filing jointly can still take a full IRA deduction. The amount phases out and disappears at $109,000. If you're unsure about the phase out amount, use an IRA calculator. (See resources)
Married Filing Separately
If you're earning more than $10,000 and you or your spouse has a pension plan at work, you can't take a deduction. You can only take one if your income is below $10,000 and then it's only limited to the amount of income you earn.
- tax form image by Kirill Zdorov from Fotolia.com
- How Should a Married Couple Treat Rental Property?
- How Much Money Should a Married Couple Make to Qualify for a Federal Pell Grant?
- Tax Breaks for Married Couples Selling Their Home
- Postnuptial Marriage Financial Agreement
- Can a Married Couple Be Eligible for an Earned Income Credit?
- Legal Implications of Owning a Joint Bank Account?
- How Does an IRA Change for Married Couples?
- Tax Advice for Married Couples
- Do Mortgage Borrowers Have to Be on the Title Deed?
- Federal Income Tax Forms: 1040EZ Instructions