spousal ira
One spouse has earned income of 8000 and an IRA taxable distribution of $15000 and is covered by a retirement plan. The other spouse has earned income of $4000 and is not covered by a retirement plan. We file a joint return. We are 62 years old and are collecting social security.
What is the maximum contribution for a deductible IRA for the spouse making $4000 in 2007?
Permalink Submitted by Alan Spross on Tue, 2008-03-25 21:48
If you are doing your own return, you might decide this is a good year to use tax software. You are in the complex situation where the taxation of your SS income and the amount of your TIRA deduction mutually affect each other, and there are worksheets in Appendix B of Pub 590 to address this situation.
Worksheet #1 produces your MAGI for determining your IRA deduction.
Worksheet #2 then determines the max deduction amount. If your post includes all non SS AGI, then the result should be $5,000, with a spousal IRA contribution being used to fund the $1,000 catch up amount.
Worksheet #3 then uses your TIRA deduction to determine how much of the SS income must be included in AGI.
Again, unless you are a #s junkie or just determined to save a few bucks, this is a good situation for tax software to address.
Another easier option is to simply fund a Roth contribution(s)……..