What Deductions Are Available?
Traditional IRA–Deductibility of your contribution is based on whether or not you are an active participant in an employer-sponsored retirement plan. For example, if you are single and not an active participant, you are eligible for a full deduction of your contribution, no matter how high your income. If you or your spouse are an active participant, the deductible amount is dependent on your MAGI and income tax-filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction. Your tax professional can help you determine whether your contribution is deductible. Even if you are not eligible for a deductible contribution, you can still make nondeductible contributions to a traditional IRA and take advantage of the tax-deferred earnings. Roth IRA–None. Money contributed to a Roth IRA is taxable as income in the year it is earned.
