Your modified adjusted gross income (MAGI) determines whether you are eligible to make a contribution to a Roth IRA at all. MAGI limits are subject to adjustment annually by the IRS.

The following are the MAGI limits and corresponding allowed contributions:

*If you are married filing separately and did not live with your spouse at any time during the year, your limit is determined under the “Single” status.

If your MAGI falls into the “partial” range, a special calculation needs to be completed to determine how much you are eligible to contribute. Visit the IRS website for guidance on calculating partial contributions to a Roth IRA.

You are always eligible to make a traditional IRA contribution as long as you have enough earned income. However, if you receive contributions or benefits under a retirement plan offered by your employer, or you are married to someone who does, your eligibility to deduct contributions to your traditional IRA is determined by your MAGI and your tax filing status.

If you make a contribution in excess of the amount that you can deduct, you do not have to remove the amount, but you will have to track the after-tax basis you have in the IRA on Form 8606 (Guideline is not able to track this for you).

The following are the MAGI limits that apply to each tax filing status:
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*If you are married filing separately and did not live with your spouse at any time during the year, your limit is determined under the “Single” status.

If your MAGI falls into the partial deduction range, a special calculation needs to be done to determine how much you are eligible to deduct. Consult your accountant or tax advisor to determine how much of your traditional IRA contribution is deductible or see the IRS deduction limits for more information about contributions to traditional IRAs.

If you (or your spouse) do not receive contributions or benefits under an employer retirement plan, then you can claim a tax deduction for 100% of the allowable contributions that you make to a traditional IRA.

For the purpose of this deduction, the IRS defines an employer retirement plan to include:

However, the rules are not the same for all of these plans. For example, SEP IRA contributions affect your eligibility to deduct your IRA contributions for the year they are actually credited to your SEP IRA, while pension plans affect the deductibility of your IRA contribution for the year for which the contributions were intended.

If you aren’t sure whether you are covered under an employer retirement plan, your employer should indicate on your Form W-2, Wage and Tax Statement, whether you are covered for any given year.

This article is for informational purposes only and is not intended to be construed as tax advice. You should consult a professional tax advisor to determine a strategy that fits your needs.