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Taxact 2012 login in 3. Taxact 2012 login in   Self-Employment Tax Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Must Pay Self-Employment Tax?Employed by a U. Taxact 2012 login in S. Taxact 2012 login in Church Effect of Exclusion Members of the Clergy Income From U. Taxact 2012 login in S. Taxact 2012 login in Possessions Exemption From Social Security and Medicare Taxes Topics - This chapter discusses: Who must pay self-employment tax, and Who is exempt from self-employment tax. Taxact 2012 login in Useful Items - You may want to see: Publication 334 Tax Guide for Small Business 517 Social Security and Other Information for Members of the Clergy and Religious Workers Form (and Instructions) Form 1040-PR Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia Form 1040-SS U. Taxact 2012 login in S. Taxact 2012 login in Self-Employment Tax Return Form 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners Schedule SE (Form 1040) Self-Employment Tax See chapter 7 for information about getting these publications and forms. Taxact 2012 login in Who Must Pay Self-Employment Tax? If you are a self-employed U. Taxact 2012 login in S. Taxact 2012 login in citizen or resident, the rules for paying self-employment tax are generally the same whether you are living in the United States or abroad. Taxact 2012 login in The self-employment tax is a social security and Medicare tax on net earnings from self- employment. Taxact 2012 login in You must pay self-employment tax if your net earnings from self-employment are at least $400. Taxact 2012 login in For 2013, the maximum amount of net earnings from self-employment that is subject to the social security portion of the tax is $113,700. Taxact 2012 login in All net earnings are subject to the Medicare portion of the tax. Taxact 2012 login in Employed by a U. Taxact 2012 login in S. Taxact 2012 login in Church If you were employed by a U. Taxact 2012 login in S. Taxact 2012 login in church or a qualified church-controlled organization that chose exemption from social security and Medicare taxes and you received wages of $108. Taxact 2012 login in 28 or more from the organization, the amounts paid to you are subject to self-employment tax. Taxact 2012 login in However, you can choose to be exempt from social security and Medicare taxes if you are a member of a recognized religious sect. Taxact 2012 login in See Publication 517 for more information about church employees and self-employment tax. Taxact 2012 login in Effect of Exclusion You must take all of your self-employment income into account in figuring your net earnings from self-employment, even income that is exempt from income tax because of the foreign earned income exclusion. Taxact 2012 login in Example. Taxact 2012 login in You are in business abroad as a consultant and qualify for the foreign earned income exclusion. Taxact 2012 login in Your foreign earned income is $95,000, your business deductions total $27,000, and your net profit is $68,000. Taxact 2012 login in You must pay self-employment tax on all of your net profit, including the amount you can exclude from income. Taxact 2012 login in Members of the Clergy If you are a member of the clergy, you are treated as self-employed for self-employment tax purposes. Taxact 2012 login in Your U. Taxact 2012 login in S. Taxact 2012 login in self-employment tax is based upon net earnings from self-employment figured without regard to the foreign earned income exclusion or the foreign housing exclusion. Taxact 2012 login in You can receive exemption from coverage for your ministerial duties if you conscientiously oppose public insurance due to religious reasons or if you oppose it due to the religious principles of your denomination. Taxact 2012 login in You must file Form 4361 to apply for this exemption. Taxact 2012 login in This subject is discussed in further detail in Publication 517. Taxact 2012 login in Income From U. Taxact 2012 login in S. Taxact 2012 login in Possessions If you are a U. Taxact 2012 login in S. Taxact 2012 login in citizen or resident alien and you own and operate a business in Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, or the U. Taxact 2012 login in S. Taxact 2012 login in Virgin Islands, you must pay tax on your net earnings from self-employment (if they are $400 or more) from those sources. Taxact 2012 login in You must pay the self-employment tax whether or not the income is exempt from U. Taxact 2012 login in S. Taxact 2012 login in income taxes (or whether or not you otherwise must file a U. Taxact 2012 login in S. Taxact 2012 login in income tax return). Taxact 2012 login in Unless your situation is described below, attach Schedule SE (Form 1040) to your U. Taxact 2012 login in S. Taxact 2012 login in income tax return. Taxact 2012 login in If you do not have to file Form 1040 with the United States and you are a resident of any of the U. Taxact 2012 login in S. Taxact 2012 login in possessions listed in the preceding paragraph, figure your self-employment tax on Form 1040-SS. Taxact 2012 login in Residents of Puerto Rico may file the Spanish-language Formulario 1040-PR. Taxact 2012 login in If you are not enclosing a check or money order, file your return with the: Department of the Treasury Internal Revenue Service Center Austin, TX 73301-0215 If you are enclosing a check or money order, file your return with the: Department of the Treasury P. Taxact 2012 login in O. Taxact 2012 login in Box 1303 Charlotte, NC 28201-1303 Exemption From Social Security and Medicare Taxes The United States may reach agreements with foreign countries to eliminate dual coverage and dual contributions (taxes) to social security systems for the same work. Taxact 2012 login in See Bilateral Social Security (Totalization) Agreements in chapter 2 under Social Security and Medicare Taxes. Taxact 2012 login in As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside. Taxact 2012 login in For more information on how any specific agreement affects self-employed persons, contact the United States Social Security Administration, as discussed under Bilateral Social Security (Totalization) Agreements in chapter 2. Taxact 2012 login in If your self-employment earnings should be exempt from foreign social security tax and subject only to U. Taxact 2012 login in S. Taxact 2012 login in self-employment tax, you should request a certificate of coverage from the U. Taxact 2012 login in S. Taxact 2012 login in Social Security Administration, Office of International Programs. Taxact 2012 login in The certificate will establish your exemption from the foreign social security tax. Taxact 2012 login in Send the request to the: Social Security Administration Office of International Programs P. Taxact 2012 login in O. Taxact 2012 login in Box 17741 Baltimore, MD 21235-7741 Prev  Up  Next   Home   More Online Publications
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History of the Office of the Taxpayer Advocate

In Taxpayer Bill of Rights 2, Congress not only established the Office of the Taxpayer Advocate but also described its functions:

  1. To assist taxpayers in resolving problems with the Internal Revenue Service;
  2. To identify areas in which taxpayers have problems in dealings with the Internal Revenue Service;
  3. To the extent possible, propose changes in the administrative practices of the IRS to mitigate those identified problems; and
  4. To identify potential legislative changes which may be appropriate to mitigate such problems.

Read the interesting history of TAS

Page Last Reviewed or Updated: 14-Mar-2014

The Taxact 2012 Login In

Taxact 2012 login in 1. Taxact 2012 login in   Traditional IRAs Table of Contents What's New for 2013 What's New for 2014 Introduction Who Can Open a Traditional IRA?What Is Compensation? When Can a Traditional IRA Be Opened? How Can a Traditional IRA Be Opened?Individual Retirement Account Individual Retirement Annuity Individual Retirement Bonds Simplified Employee Pension (SEP) Employer and Employee Association Trust Accounts Required Disclosures How Much Can Be Contributed?Limit. Taxact 2012 login in When repayment contributions can be made. Taxact 2012 login in No deduction. Taxact 2012 login in Reserve component. Taxact 2012 login in Figuring your IRA deduction. Taxact 2012 login in Reporting the repayment. Taxact 2012 login in Example. Taxact 2012 login in General Limit Kay Bailey Hutchison Spousal IRA Limit Filing Status Less Than Maximum Contributions More Than Maximum Contributions When Can Contributions Be Made? How Much Can You Deduct?Kay Bailey Hutchison Spousal IRA. Taxact 2012 login in Are You Covered by an Employer Plan? Limit if Covered by Employer Plan Reporting Deductible Contributions Nondeductible Contributions Examples — Worksheet for Reduced IRA Deduction for 2013 What if You Inherit an IRA?Treating it as your own. Taxact 2012 login in Can You Move Retirement Plan Assets?Transfers to Roth IRAs from other retirement plans. Taxact 2012 login in Trustee-to-Trustee Transfer Rollovers Transfers Incident To Divorce Converting From Any Traditional IRA Into a Roth IRA Recharacterizations When Can You Withdraw or Use Assets?Contributions Returned Before Due Date of Return When Must You Withdraw Assets? (Required Minimum Distributions)IRA Owners IRA Beneficiaries Which Table Do You Use To Determine Your Required Minimum Distribution? What Age(s) Do You Use With the Table(s)? Miscellaneous Rules for Required Minimum Distributions Are Distributions Taxable?January 2013 QCDs treated as made in 2012. Taxact 2012 login in 2013 Reporting. Taxact 2012 login in Additional reporting requirements if you made the election to treat a January 2013 QCD as made in 2012. Taxact 2012 login in One-time transfer. Taxact 2012 login in Testing period rules apply. Taxact 2012 login in More information. Taxact 2012 login in Distributions Fully or Partly Taxable Figuring the Nontaxable and Taxable Amounts Recognizing Losses on Traditional IRA Investments Other Special IRA Distribution Situations Reporting and Withholding Requirements for Taxable Amounts What Acts Result in Penalties or Additional Taxes?Prohibited Transactions Investment in Collectibles Excess Contributions Early Distributions Excess Accumulations (Insufficient Distributions) Reporting Additional Taxes What's New for 2013 Traditional IRA contribution and deduction limit. Taxact 2012 login in  The contribution limit to your traditional IRA for 2013 will be increased to the smaller of the following amounts: $5,500, or Your taxable compensation for the year. Taxact 2012 login in If you were age 50 or older before 2014, the most that can be contributed to your traditional IRA for 2013 will be the smaller of the following amounts: $6,500, or Your taxable compensation for the year. Taxact 2012 login in For more information, see How Much Can Be Contributed? in this chapter. Taxact 2012 login in Modified AGI limit for traditional IRA contributions increased. Taxact 2012 login in  For 2013, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $95,000 but less than $115,000 for a married couple filing a joint return or a qualifying widow(er), More than $59,000 but less than $69,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Taxact 2012 login in If you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $178,000 but less than $188,000. Taxact 2012 login in If your modified AGI is $188,000 or more, you cannot take a deduction for contributions to a traditional IRA. Taxact 2012 login in See How Much Can You Deduct? in this chapter. Taxact 2012 login in Net Investment Income Tax. Taxact 2012 login in  For purposes of the Net Investment Income Tax (NIIT), net investment income does not include distributions from a qualified retirement plan (for example, 401(a), 403(a), 403(b), 457(b) plans, and IRAs). Taxact 2012 login in However, these distributions are taken into account when determining the modified adjusted gross income threshold. Taxact 2012 login in Distributions from a nonqualified retirement plan are included in net investment income. Taxact 2012 login in See Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions for more information. Taxact 2012 login in What's New for 2014 Modified AGI limit for traditional IRA contributions increased. Taxact 2012 login in  For 2014, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: More than $96,000 but less than $116,000 for a married couple filing a joint return or a qualifying widow(er), More than $60,000 but less than $70,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return. Taxact 2012 login in If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Taxact 2012 login in If your modified AGI is $191,000 or more, you cannot take a deduction for contributions to a traditional IRA. Taxact 2012 login in Introduction This chapter discusses the original IRA. Taxact 2012 login in In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a “traditional IRA. Taxact 2012 login in ” A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. Taxact 2012 login in The following are two advantages of a traditional IRA: You may be able to deduct some or all of your contributions to it, depending on your circumstances. Taxact 2012 login in Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Taxact 2012 login in Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: You (or, if you file a joint return, your spouse) received taxable compensation during the year, and You were not age 70½ by the end of the year. Taxact 2012 login in You can have a traditional IRA whether or not you are covered by any other retirement plan. Taxact 2012 login in However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. Taxact 2012 login in See How Much Can You Deduct , later. Taxact 2012 login in Both spouses have compensation. Taxact 2012 login in   If both you and your spouse have compensation and are under age 70½, each of you can open an IRA. Taxact 2012 login in You cannot both participate in the same IRA. Taxact 2012 login in If you file a joint return, only one of you needs to have compensation. Taxact 2012 login in What Is Compensation? Generally, compensation is what you earn from working. Taxact 2012 login in For a summary of what compensation does and does not include, see Table 1-1. Taxact 2012 login in Compensation includes all of the items discussed next (even if you have more than one type). Taxact 2012 login in Wages, salaries, etc. Taxact 2012 login in   Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. Taxact 2012 login in The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). Taxact 2012 login in Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. Taxact 2012 login in Commissions. Taxact 2012 login in   An amount you receive that is a percentage of profits or sales price is compensation. Taxact 2012 login in Self-employment income. Taxact 2012 login in   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: The deduction for contributions made on your behalf to retirement plans, and The deduction allowed for the deductible part of your self-employment taxes. Taxact 2012 login in   Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. Taxact 2012 login in Self-employment loss. Taxact 2012 login in   If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. Taxact 2012 login in Alimony and separate maintenance. Taxact 2012 login in   For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. Taxact 2012 login in Nontaxable combat pay. Taxact 2012 login in   If you were a member of the U. Taxact 2012 login in S. Taxact 2012 login in Armed Forces, compensation includes any nontaxable combat pay you received. Taxact 2012 login in This amount should be reported in box 12 of your 2013 Form W-2 with code Q. Taxact 2012 login in Table 1-1. Taxact 2012 login in Compensation for Purposes of an IRA Includes . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in Does not include . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in   earnings and profits from property. Taxact 2012 login in wages, salaries, etc. Taxact 2012 login in     interest and dividend income. Taxact 2012 login in commissions. Taxact 2012 login in     pension or annuity income. Taxact 2012 login in self-employment income. Taxact 2012 login in     deferred compensation. Taxact 2012 login in alimony and separate maintenance. Taxact 2012 login in     income from certain  partnerships. Taxact 2012 login in nontaxable combat pay. Taxact 2012 login in     any amounts you exclude from income. Taxact 2012 login in     What Is Not Compensation? Compensation does not include any of the following items. Taxact 2012 login in Earnings and profits from property, such as rental income, interest income, and dividend income. Taxact 2012 login in Pension or annuity income. Taxact 2012 login in Deferred compensation received (compensation payments postponed from a past year). Taxact 2012 login in Income from a partnership for which you do not provide services that are a material income-producing factor. Taxact 2012 login in Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. Taxact 2012 login in Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. Taxact 2012 login in When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. Taxact 2012 login in However, the time for making contributions for any year is limited. Taxact 2012 login in See When Can Contributions Be Made , later. Taxact 2012 login in How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. Taxact 2012 login in You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance company. Taxact 2012 login in You can also open an IRA through your stockbroker. Taxact 2012 login in Any IRA must meet Internal Revenue Code requirements. Taxact 2012 login in The requirements for the various arrangements are discussed below. Taxact 2012 login in Kinds of traditional IRAs. Taxact 2012 login in   Your traditional IRA can be an individual retirement account or annuity. Taxact 2012 login in It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Taxact 2012 login in Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. Taxact 2012 login in The account is created by a written document. Taxact 2012 login in The document must show that the account meets all of the following requirements. Taxact 2012 login in The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian. Taxact 2012 login in The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. Taxact 2012 login in However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. Taxact 2012 login in Contributions, except for rollover contributions, must be in cash. Taxact 2012 login in See Rollovers , later. Taxact 2012 login in You must have a nonforfeitable right to the amount at all times. Taxact 2012 login in Money in your account cannot be used to buy a life insurance policy. Taxact 2012 login in Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. Taxact 2012 login in You must start receiving distributions by April 1 of the year following the year in which you reach age 70½. Taxact 2012 login in See When Must You Withdraw Assets? (Required Minimum Distributions) , later. Taxact 2012 login in Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. Taxact 2012 login in An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. Taxact 2012 login in An individual retirement annuity must meet all the following requirements. Taxact 2012 login in Your entire interest in the contract must be nonforfeitable. Taxact 2012 login in The contract must provide that you cannot transfer any portion of it to any person other than the issuer. Taxact 2012 login in There must be flexible premiums so that if your compensation changes, your payment can also change. Taxact 2012 login in This provision applies to contracts issued after November 6, 1978. Taxact 2012 login in The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. Taxact 2012 login in Distributions must begin by April 1 of the year following the year in which you reach age 70½. Taxact 2012 login in See When Must You Withdraw Assets? (Required Minimum Distributions) , later. Taxact 2012 login in Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. Taxact 2012 login in The bonds have the following features. Taxact 2012 login in They stop earning interest when you reach age 70½. Taxact 2012 login in If you die, interest will stop 5 years after your death, or on the date you would have reached age 70½, whichever is earlier. Taxact 2012 login in You cannot transfer the bonds. Taxact 2012 login in If you cash (redeem) the bonds before the year in which you reach age 59½, you may be subject to a 10% additional tax. Taxact 2012 login in See Age 59½ Rule under Early Distributions, later. Taxact 2012 login in You can roll over redemption proceeds into IRAs. Taxact 2012 login in Simplified Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. Taxact 2012 login in Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. Taxact 2012 login in See Publication 560 for more information about SEPs. Taxact 2012 login in Employer and Employee Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. Taxact 2012 login in The requirements for individual retirement accounts apply to these traditional IRAs. Taxact 2012 login in Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. Taxact 2012 login in However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. Taxact 2012 login in The disclosure statement must explain certain items in plain language. Taxact 2012 login in For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. Taxact 2012 login in This explanation must appear at the beginning of the disclosure statement. Taxact 2012 login in If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. Taxact 2012 login in The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. Taxact 2012 login in These requirements apply to all sponsors. Taxact 2012 login in How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. Taxact 2012 login in These limits and rules are explained below. Taxact 2012 login in Community property laws. Taxact 2012 login in   Except as discussed later under Kay Bailey Hutchison Spousal IRA Limit , each spouse figures his or her limit separately, using his or her own compensation. Taxact 2012 login in This is the rule even in states with community property laws. Taxact 2012 login in Brokers' commissions. Taxact 2012 login in   Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. Taxact 2012 login in For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. Taxact 2012 login in Trustees' fees. Taxact 2012 login in   Trustees' administrative fees are not subject to the contribution limit. Taxact 2012 login in For information about whether you can deduct trustees' fees, see Trustees' fees , later, under How Much Can You Deduct. Taxact 2012 login in Qualified reservist repayments. Taxact 2012 login in   If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined later under Early Distributions) you received. Taxact 2012 login in You can make these repayment contributions even if they would cause your total contributions to the IRA to be more than the general limit on contributions. Taxact 2012 login in To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. Taxact 2012 login in Limit. Taxact 2012 login in   Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions , later. Taxact 2012 login in When repayment contributions can be made. Taxact 2012 login in   You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. Taxact 2012 login in No deduction. Taxact 2012 login in   You cannot deduct qualified reservist repayments. Taxact 2012 login in Reserve component. Taxact 2012 login in   The term “reserve component” means the: Army National Guard of the United States, Army Reserve, Naval Reserve, Marine Corps Reserve, Air National Guard of the United States, Air Force Reserve, Coast Guard Reserve, or Reserve Corps of the Public Health Service. Taxact 2012 login in Figuring your IRA deduction. Taxact 2012 login in   The repayment of qualified reservist distributions does not affect the amount you can deduct as an IRA contribution. Taxact 2012 login in Reporting the repayment. Taxact 2012 login in   If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. Taxact 2012 login in Example. Taxact 2012 login in   In 2013, your IRA contribution limit is $5,500. Taxact 2012 login in However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. Taxact 2012 login in You can make a nondeductible contribution of $2,000 ($5,500 - $3,500). Taxact 2012 login in In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. Taxact 2012 login in   For 2013, you can contribute a total of $8,500 to your IRA. Taxact 2012 login in This is made up of the maximum deductible contribution of $3,500; a nondeductible contribution of $2,000; and a $3,000 qualified reservist repayment. Taxact 2012 login in You contribute the maximum allowable for the year. Taxact 2012 login in Since you are making a nondeductible contribution ($2,000) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $5,000 ($2,000 + $3,000) on line 1 of Form 8606. Taxact 2012 login in The qualified reservist repayment is not deductible. Taxact 2012 login in Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. Taxact 2012 login in See chapter 2 for information about Roth IRAs. Taxact 2012 login in General Limit For 2013, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: $5,500 ($6,500 if you are age 50 or older), or Your taxable compensation (defined earlier) for the year. Taxact 2012 login in Note. Taxact 2012 login in This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). Taxact 2012 login in This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or part of the contributions are nondeductible. Taxact 2012 login in (See Nondeductible Contributions , later. Taxact 2012 login in ) Qualified reservist repayments do not affect this limit. Taxact 2012 login in Examples. Taxact 2012 login in George, who is 34 years old and single, earns $24,000 in 2013. Taxact 2012 login in His IRA contributions for 2013 are limited to $5,500. Taxact 2012 login in Danny, an unmarried college student working part time, earns $3,500 in 2013. Taxact 2012 login in His IRA contributions for 2013 are limited to $3,500, the amount of his compensation. Taxact 2012 login in More than one IRA. Taxact 2012 login in   If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. Taxact 2012 login in Annuity or endowment contracts. Taxact 2012 login in   If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,500 ($6,500 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. Taxact 2012 login in If more than this amount is contributed, the annuity or endowment contract is disqualified. Taxact 2012 login in Kay Bailey Hutchison Spousal IRA Limit For 2013, if you file a joint return and your taxable compensation is less than that of your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: $5,500 ($6,500 if you are age 50 or older), or The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. Taxact 2012 login in Your spouse's IRA contribution for the year to a traditional IRA. Taxact 2012 login in Any contributions for the year to a Roth IRA on behalf of your spouse. Taxact 2012 login in This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $11,000 ($12,000 if only one of you is age 50 or older or $13,000 if both of you are age 50 or older). Taxact 2012 login in Note. Taxact 2012 login in This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). Taxact 2012 login in Example. Taxact 2012 login in Kristin, a full-time student with no taxable compensation, marries Carl during the year. Taxact 2012 login in Neither of them was age 50 by the end of 2013. Taxact 2012 login in For the year, Carl has taxable compensation of $30,000. Taxact 2012 login in He plans to contribute (and deduct) $5,500 to a traditional IRA. Taxact 2012 login in If he and Kristin file a joint return, each can contribute $5,500 to a traditional IRA. Taxact 2012 login in This is because Kristin, who has no compensation, can add Carl's compensation, reduced by the amount of his IRA contribution ($30,000 − $5,500 = $24,500), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. Taxact 2012 login in In her case, $5,500 is her contribution limit, because $5,500 is less than $24,500 (her compensation for purposes of figuring her contribution limit). Taxact 2012 login in Filing Status Generally, except as discussed earlier under Kay Bailey Hutchison Spousal IRA Limit , your filing status has no effect on the amount of allowable contributions to your traditional IRA. Taxact 2012 login in However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. Taxact 2012 login in See How Much Can You Deduct , later. Taxact 2012 login in Example. Taxact 2012 login in Tom and Darcy are married and both are 53. Taxact 2012 login in They both work and each has a traditional IRA. Taxact 2012 login in Tom earned $3,800 and Darcy earned $48,000 in 2013. Taxact 2012 login in Because of the Kay Bailey Hutchison Spousal IRA limit rule, even though Tom earned less than $6,500, they can contribute up to $6,500 to his IRA for 2013 if they file a joint return. Taxact 2012 login in They can contribute up to $6,500 to Darcy's IRA. Taxact 2012 login in If they file separate returns, the amount that can be contributed to Tom's IRA is limited by his earned income, $3,800. Taxact 2012 login in Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. Taxact 2012 login in Example. Taxact 2012 login in Rafael, who is 40, earns $30,000 in 2013. Taxact 2012 login in Although he can contribute up to $5,500 for 2013, he contributes only $3,000. Taxact 2012 login in After April 15, 2014, Rafael cannot make up the difference between his actual contributions for 2013 ($3,000) and his 2013 limit ($5,500). Taxact 2012 login in He cannot contribute $2,500 more than the limit for any later year. Taxact 2012 login in More Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. Taxact 2012 login in However, a penalty or additional tax may apply. Taxact 2012 login in See Excess Contributions , later, under What Acts Result in Penalties or Additional Taxes. Taxact 2012 login in When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). Taxact 2012 login in Contributions must be in the form of money (cash, check, or money order). Taxact 2012 login in Property cannot be contributed. Taxact 2012 login in Although property cannot be contributed, your IRA may invest in certain property. Taxact 2012 login in For example, your IRA may purchase shares of stock. Taxact 2012 login in For other restrictions on the use of funds in your IRA, see Prohibited Transactions , later in this chapter. Taxact 2012 login in You may be able to transfer or roll over certain property from one retirement plan to another. Taxact 2012 login in See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . Taxact 2012 login in You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. Taxact 2012 login in For details, see the instructions for your income tax return or Form 8888, Allocation of Refund (Including Savings Bond Purchases). Taxact 2012 login in Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. Taxact 2012 login in For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. Taxact 2012 login in See Who Can Open a Traditional IRA , earlier. Taxact 2012 login in Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. Taxact 2012 login in Contributions can resume for any years that you qualify. Taxact 2012 login in Contributions must be made by due date. Taxact 2012 login in   Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. Taxact 2012 login in For most people, this means that contributions for 2013 must be made by April 15, 2014, and contributions for 2014 must be made by April 15, 2015. Taxact 2012 login in Age 70½ rule. Taxact 2012 login in   Contributions cannot be made to your traditional IRA for the year in which you reach age 70½ or for any later year. Taxact 2012 login in   You attain age 70½ on the date that is 6 calendar months after the 70th anniversary of your birth. Taxact 2012 login in If you were born on or before June 30, 1943, you cannot contribute for 2013 or any later year. Taxact 2012 login in Designating year for which contribution is made. Taxact 2012 login in   If an amount is contributed to your traditional IRA between January 1 and April 15, you should tell the sponsor which year (the current year or the previous year) the contribution is for. Taxact 2012 login in If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). Taxact 2012 login in Filing before a contribution is made. Taxact 2012 login in    You can file your return claiming a traditional IRA contribution before the contribution is actually made. Taxact 2012 login in Generally, the contribution must be made by the due date of your return, not including extensions. Taxact 2012 login in Contributions not required. Taxact 2012 login in   You do not have to contribute to your traditional IRA for every tax year, even if you can. Taxact 2012 login in How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed . Taxact 2012 login in However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. Taxact 2012 login in See Limit if Covered by Employer Plan , later. Taxact 2012 login in You may be able to claim a credit for contributions to your traditional IRA. Taxact 2012 login in For more information, see chapter 4. Taxact 2012 login in Trustees' fees. Taxact 2012 login in   Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deductible as IRA contributions. Taxact 2012 login in However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). Taxact 2012 login in For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. Taxact 2012 login in Brokers' commissions. Taxact 2012 login in   These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Taxact 2012 login in Full deduction. Taxact 2012 login in   If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: $5,500 ($6,500 if you are age 50 or older), or 100% of your compensation. Taxact 2012 login in   This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. Taxact 2012 login in Kay Bailey Hutchison Spousal IRA. Taxact 2012 login in   In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of: $5,500 ($6,500 if the spouse with the lower compensation is age 50 or older), or The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. Taxact 2012 login in The IRA deduction for the year of the spouse with the greater compensation. Taxact 2012 login in Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. Taxact 2012 login in Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. Taxact 2012 login in   This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. Taxact 2012 login in Note. Taxact 2012 login in If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA. Taxact 2012 login in After a divorce or legal separation, you can deduct only the contributions to your own IRA. Taxact 2012 login in Your deductions are subject to the rules for single individuals. Taxact 2012 login in Covered by an employer retirement plan. Taxact 2012 login in   If you or your spouse was covered by an employer retirement plan at any time during the year for which contributions were made, your deduction may be further limited. Taxact 2012 login in This is discussed later under Limit if Covered by Employer Plan . Taxact 2012 login in Limits on the amount you can deduct do not affect the amount that can be contributed. Taxact 2012 login in Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. Taxact 2012 login in The “Retirement Plan” box should be checked if you were covered. Taxact 2012 login in Reservists and volunteer firefighters should also see Situations in Which You Are Not Covered , later. Taxact 2012 login in If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Taxact 2012 login in Federal judges. Taxact 2012 login in   For purposes of the IRA deduction, federal judges are covered by an employer plan. Taxact 2012 login in For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. Taxact 2012 login in These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Taxact 2012 login in Tax year. Taxact 2012 login in   Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. Taxact 2012 login in For almost all people, the tax year is the calendar year. Taxact 2012 login in Defined contribution plan. Taxact 2012 login in   Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. Taxact 2012 login in However, also see Situations in Which You Are Not Covered , later. Taxact 2012 login in   A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. Taxact 2012 login in In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. Taxact 2012 login in The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. Taxact 2012 login in Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Taxact 2012 login in Example. Taxact 2012 login in Company A has a money purchase pension plan. Taxact 2012 login in Its plan year is from July 1 to June 30. Taxact 2012 login in The plan provides that contributions must be allocated as of June 30. Taxact 2012 login in Bob, an employee, leaves Company A on December 31, 2012. Taxact 2012 login in The contribution for the plan year ending on June 30, 2013, is made February 15, 2014. Taxact 2012 login in Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2013 tax year. Taxact 2012 login in   A special rule applies to certain plans in which it is not possible to determine if an amount will be contributed to your account for a given plan year. Taxact 2012 login in If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. Taxact 2012 login in If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. Taxact 2012 login in Example. Taxact 2012 login in Mickey was covered by a profit-sharing plan and left the company on December 31, 2012. Taxact 2012 login in The plan year runs from July 1 to June 30. Taxact 2012 login in Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. Taxact 2012 login in Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. Taxact 2012 login in As of June 30, 2013, no contributions were made that were allocated to the June 30, 2013, plan year, and no forfeitures had been allocated within the plan year. Taxact 2012 login in In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. Taxact 2012 login in On December 31, 2013, the company decided to contribute to the plan for the plan year ending June 30, 2013. Taxact 2012 login in That contribution was made on February 15, 2014. Taxact 2012 login in Mickey is an active participant in the plan for his 2014 tax year but not for his 2013 tax year. Taxact 2012 login in No vested interest. Taxact 2012 login in   If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. Taxact 2012 login in Defined benefit plan. Taxact 2012 login in   If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. Taxact 2012 login in This rule applies even if you: Declined to participate in the plan, Did not make a required contribution, or Did not perform the minimum service required to accrue a benefit for the year. Taxact 2012 login in   A defined benefit plan is any plan that is not a defined contribution plan. Taxact 2012 login in In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. Taxact 2012 login in The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. Taxact 2012 login in Defined benefit plans include pension plans and annuity plans. Taxact 2012 login in Example. Taxact 2012 login in Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. Taxact 2012 login in Nick leaves Company B on December 31, 2012. Taxact 2012 login in Because Nick is eligible to participate in the plan for its year ending June 30, 2013, he is covered by the plan for his 2013 tax year. Taxact 2012 login in No vested interest. Taxact 2012 login in   If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. Taxact 2012 login in Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. Taxact 2012 login in Social security or railroad retirement. Taxact 2012 login in   Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Taxact 2012 login in Benefits from previous employer's plan. Taxact 2012 login in   If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Taxact 2012 login in Reservists. Taxact 2012 login in   If the only reason you participate in a plan is because you are a member of a reserve unit of the Armed Forces, you may not be covered by the plan. Taxact 2012 login in You are not covered by the plan if both of the following conditions are met. Taxact 2012 login in The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. Taxact 2012 login in You did not serve more than 90 days on active duty during the year (not counting duty for training). Taxact 2012 login in Volunteer firefighters. Taxact 2012 login in   If the only reason you participate in a plan is because you are a volunteer firefighter, you may not be covered by the plan. Taxact 2012 login in You are not covered by the plan if both of the following conditions are met. Taxact 2012 login in The plan you participate in is established for its employees by: The United States, A state or political subdivision of a state, or An instrumentality of either (a) or (b) above. Taxact 2012 login in Your accrued retirement benefits at the beginning of the year will not provide more than $1,800 per year at retirement. Taxact 2012 login in Limit if Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. Taxact 2012 login in Your deduction is also affected by how much income you had and by your filing status. Taxact 2012 login in Your deduction may also be affected by social security benefits you received. Taxact 2012 login in Reduced or no deduction. Taxact 2012 login in   If either you or your spouse was covered by an employer retirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. Taxact 2012 login in   Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. Taxact 2012 login in These amounts vary depending on your filing status. Taxact 2012 login in   To determine if your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout . Taxact 2012 login in Once you have determined your modified AGI and your filing status, you can use Table 1-2 or Table 1-3 to determine if the phaseout applies. Taxact 2012 login in Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. Taxact 2012 login in You received social security benefits. Taxact 2012 login in You received taxable compensation. Taxact 2012 login in Contributions were made to your traditional IRA. Taxact 2012 login in You or your spouse was covered by an employer retirement plan. Taxact 2012 login in Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Taxact 2012 login in Appendix B includes an example with filled-in worksheets to assist you. Taxact 2012 login in Table 1-2. Taxact 2012 login in Effect of Modified AGI1 on Deduction if You Are Covered by a Retirement Plan at Work If you are covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. Taxact 2012 login in IF your filing status is . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your modified adjusted gross income (modified AGI) is . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in THEN you can take . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in single or head of household $59,000 or less a full deduction. Taxact 2012 login in more than $59,000 but less than $69,000 a partial deduction. Taxact 2012 login in $69,000 or more no deduction. Taxact 2012 login in married filing jointly or  qualifying widow(er) $95,000 or less a full deduction. Taxact 2012 login in more than $95,000 but less than $115,000 a partial deduction. Taxact 2012 login in $115,000 or more no deduction. Taxact 2012 login in married filing separately2 less than $10,000 a partial deduction. Taxact 2012 login in $10,000 or more no deduction. Taxact 2012 login in 1 Modified AGI (adjusted gross income). Taxact 2012 login in See Modified adjusted gross income (AGI) , later. Taxact 2012 login in  2 If you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the “Single” filing status). Taxact 2012 login in Table 1-3. Taxact 2012 login in Effect of Modified AGI1 on Deduction if You Are NOT Covered by a Retirement Plan at Work If you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. Taxact 2012 login in IF your filing status is . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your modified adjusted gross income (modified AGI) is . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in THEN you can take . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in single, head of household, or qualifying widow(er) any amount a full deduction. Taxact 2012 login in married filing jointly or separately with a spouse who is not covered by a plan at work any amount a full deduction. Taxact 2012 login in married filing jointly with a spouse who is covered by a plan at work $178,000 or less a full deduction. Taxact 2012 login in more than $178,000 but less than $188,000 a partial deduction. Taxact 2012 login in $188,000 or more no deduction. Taxact 2012 login in married filing separately with a spouse who is covered by a plan at work2 less than $10,000 a partial deduction. Taxact 2012 login in $10,000 or more no deduction. Taxact 2012 login in 1 Modified AGI (adjusted gross income). Taxact 2012 login in See Modified adjusted gross income (AGI) , later. Taxact 2012 login in  2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. Taxact 2012 login in For 2014, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $181,000 but less than $191,000. Taxact 2012 login in If your AGI is $191,000 or more, you cannot take a deduction for a contribution to a traditional IRA. Taxact 2012 login in Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. Taxact 2012 login in Covered by a retirement plan. Taxact 2012 login in   If you are covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2. Taxact 2012 login in For 2014, if you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: More than $60,000 but less than $70,000 for a single individual (or head of household), More than $96,000 but less than $116,000 for a married couple filing a joint return (or a qualifying widow(er)), or Less than $10,000 for a married individual filing a separate return. Taxact 2012 login in If your spouse is covered. Taxact 2012 login in   If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3. Taxact 2012 login in Filing status. Taxact 2012 login in   Your filing status depends primarily on your marital status. Taxact 2012 login in For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. Taxact 2012 login in If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Taxact 2012 login in Lived apart from spouse. Taxact 2012 login in   If you did not live with your spouse at any time during the year and you file a separate return, your filing status, for this purpose, is single. Taxact 2012 login in Modified adjusted gross income (AGI). Taxact 2012 login in   You can use Worksheet 1-1 to figure your modified AGI. Taxact 2012 login in If you made contributions to your IRA for 2013 and received a distribution from your IRA in 2013, see Both contributions for 2013 and distributions in 2013 , later. Taxact 2012 login in    Do not assume that your modified AGI is the same as your compensation. Taxact 2012 login in Your modified AGI may include income in addition to your compensation (discussed earlier) such as interest, dividends, and income from IRA distributions. Taxact 2012 login in Form 1040. Taxact 2012 login in   If you file Form 1040, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. Taxact 2012 login in IRA deduction. Taxact 2012 login in Student loan interest deduction. Taxact 2012 login in Tuition and fees deduction. Taxact 2012 login in Domestic production activities deduction. Taxact 2012 login in Foreign earned income exclusion. Taxact 2012 login in Foreign housing exclusion or deduction. Taxact 2012 login in Exclusion of qualified savings bond interest shown on Form 8815. Taxact 2012 login in Exclusion of employer-provided adoption benefits shown on Form 8839. Taxact 2012 login in This is your modified AGI. Taxact 2012 login in Form 1040A. Taxact 2012 login in   If you file Form 1040A, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. Taxact 2012 login in IRA deduction. Taxact 2012 login in Student loan interest deduction. Taxact 2012 login in Tuition and fees deduction. Taxact 2012 login in Exclusion of qualified savings bond interest shown on Form 8815. Taxact 2012 login in This is your modified AGI. Taxact 2012 login in Form 1040NR. Taxact 2012 login in   If you file Form 1040NR, refigure the amount on the page 1 “adjusted gross income” line without taking into account any of the following amounts. Taxact 2012 login in IRA deduction. Taxact 2012 login in Student loan interest deduction. Taxact 2012 login in Domestic production activities deduction. Taxact 2012 login in Exclusion of qualified savings bond interest shown on Form 8815. Taxact 2012 login in Exclusion of employer-provided adoption benefits shown on Form 8839. Taxact 2012 login in This is your modified AGI. Taxact 2012 login in Income from IRA distributions. Taxact 2012 login in   If you received distributions in 2013 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. Taxact 2012 login in Both contributions for 2013 and distributions in 2013. Taxact 2012 login in   If all three of the following apply, any IRA distributions you received in 2013 may be partly tax free and partly taxable. Taxact 2012 login in You received distributions in 2013 from one or more traditional IRAs, You made contributions to a traditional IRA for 2013, and Some of those contributions may be nondeductible contributions. Taxact 2012 login in (See Nondeductible Contributions and Worksheet 1-2, later. Taxact 2012 login in ) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. Taxact 2012 login in To do this, you can use Worksheet 1-5, later. Taxact 2012 login in   If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1, later. Taxact 2012 login in How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2. Taxact 2012 login in Figuring Your Reduced IRA Deduction for 2013. Taxact 2012 login in The Instructions for Form 1040, Form 1040A, and Form 1040NR include similar worksheets that you can use instead of the worksheet in this publication. Taxact 2012 login in If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Social Security Recipients , earlier. Taxact 2012 login in Note. Taxact 2012 login in If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Taxact 2012 login in Worksheet 1-1. Taxact 2012 login in Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. Taxact 2012 login in 1. Taxact 2012 login in Enter your adjusted gross income (AGI) from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37, figured without taking into account the amount from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32 1. Taxact 2012 login in   2. Taxact 2012 login in Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33 2. Taxact 2012 login in   3. Taxact 2012 login in Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3. Taxact 2012 login in   4. Taxact 2012 login in Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4. Taxact 2012 login in   5. Taxact 2012 login in Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Taxact 2012 login in   6. Taxact 2012 login in Enter any foreign housing deduction from Form 2555, line 50 6. Taxact 2012 login in   7. Taxact 2012 login in Enter any excludable savings bond interest from Form 8815, line 14 7. Taxact 2012 login in   8. Taxact 2012 login in Enter any excluded employer-provided adoption benefits from Form 8839, line 28 8. Taxact 2012 login in   9. Taxact 2012 login in Add lines 1 through 8. Taxact 2012 login in This is your Modified AGI for traditional IRA purposes 9. Taxact 2012 login in   Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. Taxact 2012 login in If you file Form 1040A, enter your IRA deduction on line 17 of that form. Taxact 2012 login in If you file Form 1040NR, enter your IRA deduction on line 32 of that form. Taxact 2012 login in You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. Taxact 2012 login in Self-employed. Taxact 2012 login in   If you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. Taxact 2012 login in If you file Form 1040NR, enter your deduction on line 28 of that form. Taxact 2012 login in Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. Taxact 2012 login in The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Taxact 2012 login in Example. Taxact 2012 login in Tony is 29 years old and single. Taxact 2012 login in In 2013, he was covered by a retirement plan at work. Taxact 2012 login in His salary is $62,000. Taxact 2012 login in His modified AGI is $70,000. Taxact 2012 login in Tony makes a $5,500 IRA contribution for 2013. Taxact 2012 login in Because he was covered by a retirement plan and his modified AGI is above $69,000, he cannot deduct his $5,500 IRA contribution. Taxact 2012 login in He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. Taxact 2012 login in Repayment of reservist distributions. Taxact 2012 login in   Nondeductible contributions may include repayments of qualified reservist distributions. Taxact 2012 login in For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier. Taxact 2012 login in Form 8606. Taxact 2012 login in   To designate contributions as nondeductible, you must file Form 8606. Taxact 2012 login in (See the filled-in Forms 8606 in this chapter. Taxact 2012 login in )   You do not have to designate a contribution as nondeductible until you file your tax return. Taxact 2012 login in When you file, you can even designate otherwise deductible contributions as nondeductible contributions. Taxact 2012 login in   You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. Taxact 2012 login in    A Form 8606 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. Taxact 2012 login in In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. Taxact 2012 login in See Form 8606 under Distributions Fully or Partly Taxable, later. Taxact 2012 login in Failure to report nondeductible contributions. Taxact 2012 login in   If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. Taxact 2012 login in All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Taxact 2012 login in Penalty for overstatement. Taxact 2012 login in   If you overstate the amount of nondeductible contributions on your Form 8606 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. Taxact 2012 login in Penalty for failure to file Form 8606. Taxact 2012 login in   You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. Taxact 2012 login in Tax on earnings on nondeductible contributions. Taxact 2012 login in   As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. Taxact 2012 login in Cost basis. Taxact 2012 login in   You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Taxact 2012 login in Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. Taxact 2012 login in    Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. Taxact 2012 login in See Are Distributions Taxable, later, for more information. Taxact 2012 login in Recordkeeping. Taxact 2012 login in There is a recordkeeping worksheet, Appendix A. Taxact 2012 login in Summary Record of Traditional IRA(s) for 2013 , that you can use to keep a record of deductible and nondeductible IRA contributions. Taxact 2012 login in Examples — Worksheet for Reduced IRA Deduction for 2013 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013. Taxact 2012 login in Example 1. Taxact 2012 login in For 2013, Tom and Betty file a joint return on Form 1040. Taxact 2012 login in They are both 39 years old. Taxact 2012 login in They are both employed and Tom is covered by his employer's retirement plan. Taxact 2012 login in Tom's salary is $59,000 and Betty's is $32,555. Taxact 2012 login in They each have a traditional IRA and their combined modified AGI, which includes $5,000 interest and dividend income, is $96,555. Taxact 2012 login in Because their modified AGI is between $95,000 and $115,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . Taxact 2012 login in For 2013, Tom contributed $5,500 to his IRA and Betty contributed $5,500 to hers. Taxact 2012 login in Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. Taxact 2012 login in Tom can take a deduction of only $5,080. Taxact 2012 login in He can choose to treat the $5,080 as either deductible or nondeductible contributions. Taxact 2012 login in He can either leave the $420 ($5,500 − $5,080) of nondeductible contributions in his IRA or withdraw them by April 15, 2014. Taxact 2012 login in He decides to treat the $5,080 as deductible contributions and leave the $420 of nondeductible contributions in his IRA. Taxact 2012 login in Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, Tom figures his deductible and nondeductible amounts as shown on Worksheet 1-2. Taxact 2012 login in Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated. Taxact 2012 login in Betty figures her IRA deduction as follows. Taxact 2012 login in Betty can treat all or part of her contributions as either deductible or nondeductible. Taxact 2012 login in This is because her $5,500 contribution for 2013 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Plan . Taxact 2012 login in She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2013, because their modified AGI is not within the phaseout range that applies. Taxact 2012 login in Betty decides to treat her $5,500 IRA contributions as deductible. Taxact 2012 login in The IRA deductions of $5,080 and $5,500 on the joint return for Tom and Betty total $10,580. Taxact 2012 login in Example 2. Taxact 2012 login in For 2013, Ed and Sue file a joint return on Form 1040. Taxact 2012 login in They are both 39 years old. Taxact 2012 login in Ed is covered by his employer's retirement plan. Taxact 2012 login in Ed's salary is $45,000. Taxact 2012 login in Sue had no compensation for the year and did not contribute to an IRA. Taxact 2012 login in Sue is not covered by an employer plan. Taxact 2012 login in Ed contributed $5,500 to his traditional IRA and $5,500 to a traditional IRA for Sue (a Kay Bailey Hutchison Spousal IRA). Taxact 2012 login in Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $180,555. Taxact 2012 login in Because the combined modified AGI is $115,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. Taxact 2012 login in He can either leave the $5,500 of nondeductible contributions in his IRA or withdraw them by April 15, 2014. Taxact 2012 login in Sue figures her IRA deduction as shown on Worksheet 1-2. Taxact 2012 login in Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated. Taxact 2012 login in Worksheet 1-2. Taxact 2012 login in Figuring Your Reduced IRA Deduction for 2013 (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. Taxact 2012 login in ) Note. Taxact 2012 login in If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Taxact 2012 login in IF you . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your  filing status is . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your modified AGI is over . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in THEN enter on  line 1 below . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. Taxact 2012 login in Enter applicable amount from table above 1. Taxact 2012 login in   2. Taxact 2012 login in Enter your modified AGI (that of both spouses, if married filing jointly) 2. Taxact 2012 login in     Note. Taxact 2012 login in If line 2 is equal to or more than the amount on line 1, stop here. Taxact 2012 login in  Your IRA contributions are not deductible. Taxact 2012 login in See Nondeductible Contributions , earlier. Taxact 2012 login in     3. Taxact 2012 login in Subtract line 2 from line 1. Taxact 2012 login in If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. Taxact 2012 login in You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. Taxact 2012 login in   4. Taxact 2012 login in Multiply line 3 by the percentage below that applies to you. Taxact 2012 login in If the result is not a multiple of $10, round it to the next highest multiple of $10. Taxact 2012 login in (For example, $611. Taxact 2012 login in 40 is rounded to $620. Taxact 2012 login in ) However, if the result is less than $200, enter $200. Taxact 2012 login in         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Taxact 2012 login in 5% (. Taxact 2012 login in 275) (by 32. Taxact 2012 login in 5% (. Taxact 2012 login in 325) if you are age 50 or older). Taxact 2012 login in All others, multiply line 3 by 55% (. Taxact 2012 login in 55) (by 65% (. Taxact 2012 login in 65) if you are age 50 or older). Taxact 2012 login in 4. Taxact 2012 login in   5. Taxact 2012 login in Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). Taxact 2012 login in If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. Taxact 2012 login in If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Taxact 2012 login in   6. Taxact 2012 login in Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). Taxact 2012 login in If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Taxact 2012 login in 6. Taxact 2012 login in   7. Taxact 2012 login in IRA deduction. Taxact 2012 login in Compare lines 4, 5, and 6. Taxact 2012 login in Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. Taxact 2012 login in If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Taxact 2012 login in   8. Taxact 2012 login in Nondeductible contribution. Taxact 2012 login in Subtract line 7 from line 5 or 6, whichever is smaller. Taxact 2012 login in  Enter the result here and on line 1 of your Form 8606 8. Taxact 2012 login in   Worksheet 1-2. Taxact 2012 login in Figuring Your Reduced IRA Deduction for 2013—Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. Taxact 2012 login in ) Note. Taxact 2012 login in If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Taxact 2012 login in IF you . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your  filing status is . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your modified AGI is over . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in THEN enter on  line 1 below . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. Taxact 2012 login in Enter applicable amount from table above 1. Taxact 2012 login in 115,000 2. Taxact 2012 login in Enter your modified AGI (that of both spouses, if married filing jointly) 2. Taxact 2012 login in 96,555   Note. Taxact 2012 login in If line 2 is equal to or more than the amount on line 1, stop here. Taxact 2012 login in  Your IRA contributions are not deductible. Taxact 2012 login in See Nondeductible Contributions , earlier. Taxact 2012 login in     3. Taxact 2012 login in Subtract line 2 from line 1. Taxact 2012 login in If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. Taxact 2012 login in You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. Taxact 2012 login in 18,445 4. Taxact 2012 login in Multiply line 3 by the percentage below that applies to you. Taxact 2012 login in If the result is not a multiple of $10, round it to the next highest multiple of $10. Taxact 2012 login in (For example, $611. Taxact 2012 login in 40 is rounded to $620. Taxact 2012 login in ) However, if the result is less than $200, enter $200. Taxact 2012 login in         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Taxact 2012 login in 5% (. Taxact 2012 login in 275) (by 32. Taxact 2012 login in 5% (. Taxact 2012 login in 325) if you are age 50 or older). Taxact 2012 login in All others, multiply line 3 by 55% (. Taxact 2012 login in 55) (by 65% (. Taxact 2012 login in 65) if you are age 50 or older). Taxact 2012 login in 4. Taxact 2012 login in 5,080 5. Taxact 2012 login in Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). Taxact 2012 login in If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. Taxact 2012 login in If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Taxact 2012 login in 59,000 6. Taxact 2012 login in Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). Taxact 2012 login in If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Taxact 2012 login in 6. Taxact 2012 login in 5,500 7. Taxact 2012 login in IRA deduction. Taxact 2012 login in Compare lines 4, 5, and 6. Taxact 2012 login in Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. Taxact 2012 login in If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Taxact 2012 login in 5,080 8. Taxact 2012 login in Nondeductible contribution. Taxact 2012 login in Subtract line 7 from line 5 or 6, whichever is smaller. Taxact 2012 login in  Enter the result here and on line 1 of your Form 8606 8. Taxact 2012 login in 420 Worksheet 1-2. Taxact 2012 login in Figuring Your Reduced IRA Deduction for 2013—Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status. Taxact 2012 login in ) Note. Taxact 2012 login in If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Taxact 2012 login in IF you . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your  filing status is . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in AND your modified AGI is over . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in THEN enter on  line 1 below . Taxact 2012 login in . Taxact 2012 login in . Taxact 2012 login in       are covered by an employer plan single or head of household $59,000 $69,000     married filing jointly or qualifying widow(er) $95,000 $115,000     married filing separately $0 $10,000     are not covered by an employer plan, but your spouse is covered married filing jointly $178,000 $188,000     married filing separately $0 $10,000     1. Taxact 2012 login in Enter applicable amount from table above 1. Taxact 2012 login in 188,000 2. Taxact 2012 login in Enter your modified AGI (that of both spouses, if married filing jointly) 2. Taxact 2012 login in 180,555   Note. Taxact 2012 login in If line 2 is equal to or more than the amount on line 1, stop here. Taxact 2012 login in  Your IRA contributions are not deductible. Taxact 2012 login in See Nondeductible Contributions , earlier. Taxact 2012 login in     3. Taxact 2012 login in Subtract line 2 from line 1. Taxact 2012 login in If line 3 is $10,000 or more ($20,000 or more if married filing jointly or qualifying widow(er) and you are covered by an employer plan), stop here. Taxact 2012 login in You can take a full IRA deduction for contributions of up to $5,500 ($6,500 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. Taxact 2012 login in 7,445 4. Taxact 2012 login in Multiply line 3 by the percentage below that applies to you. Taxact 2012 login in If the result is not a multiple of $10, round it to the next highest multiple of $10. Taxact 2012 login in (For example, $611. Taxact 2012 login in 40 is rounded to $620. Taxact 2012 login in ) However, if the result is less than $200, enter $200. Taxact 2012 login in         Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 27. Taxact 2012 login in 5% (. Taxact 2012 login in 275) (by 32. Taxact 2012 login in 5% (. Taxact 2012 login in 325) if you are age 50 or older). Taxact 2012 login in All others, multiply line 3 by 55% (. Taxact 2012 login in 55) (by 65% (. Taxact 2012 login in 65) if you are age 50 or older). Taxact 2012 login in 4. Taxact 2012 login in 4,100 5. Taxact 2012 login in Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). Taxact 2012 login in If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. Taxact 2012 login in If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. Taxact 2012 login in 39,500 6. Taxact 2012 login in Enter contributions made, or to be made, to your IRA for 2013, but do not enter more than $5,500 ($6,500 if you are age 50 or older). Taxact 2012 login in If contributions are more than $5,500 ($6,500 if you are age 50 or older), see Excess Contributions , later. Taxact 2012 login in 6. Taxact 2012 login in 5,500 7. Taxact 2012 login in IRA deduction. Taxact 2012 login in Compare lines 4, 5, and 6. Taxact 2012 login in Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 1040NR line for your IRA, whichever applies. Taxact 2012 login in If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. Taxact 2012 login in 4,100 8. Taxact 2012 login in Nondeductible contribution. Taxact 2012 login in Subtract line 7 from line 5 or 6, whichever is smaller. Taxact 2012 login in  Enter the result here and on line 1 of your Form 8606 8. Taxact 2012 login in 1,400 What if You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. Taxact 2012 login in A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Taxact 2012 login in Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Taxact 2012 login in Inherited from spouse. Taxact 2012 login in   If you inherit a traditional IRA from your spouse, you generally have the following three choices. Taxact 2012 login in You can: Treat it as your own IRA by designating yourself as the account owner. Taxact 2012 login in Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: Qualified employer plan, Qualified employee annuity plan (section 403(a) plan), Tax-sheltered annuity plan (s