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Traditional IRA: How Much Can You Contribute and Deduct in 2010?

If you are married, use this worksheet twice, once for you and once for your spouse.

See Quick Summary

Step One: How Much Can You Contribute to a Traditional IRA?

You need to know how much you can contribute to a traditional IRA before you calculate how much you can deduct. The amount that you can contribute to a traditional IRA depends on the amount of taxable compensation that you (and, in some cases, your spouse) had for the year. All, part, or none of your traditional IRA contribution may be tax deductible on your federal income tax return.

Go to Step One (RT10-05-D07B10)

Step Two : How Much Can You Deduct?

The amount of your federal income tax deduction depends on a number of factors, including whether you or your spouse is covered by an employer-sponsored retirement plan (e.g., a 401(k) plan), your income tax filing status for the year of the contribution, and your modified adjusted gross income for that same year. The amount that you can deduct represents the first dollars that you contribute to your traditional IRA. If you choose to contribute more (up to your maximum allowed contribution from Step One), these additional dollars would be treated as a nondeductible contribution.

For example, you determine that you can contribute up to $5,000 to a traditional IRA, but can deduct only up to $500. You may contribute $500 to a traditional IRA and deduct the full amount. If you contribute $5,000 to the traditional IRA, you can deduct $500, and the remaining $4,500 will be considered a nondeductible contribution.

Go to Step Two (RT10-05-D07E10)

Quick Summary

If you are covered by an employer-sponsored retirement plan, the amount of tax-deductible contribution you can make to a traditional IRA (if any) depends on your modified adjusted gross income (MAGI) and federal income tax filing status for the year in which you contribute (see table below):

If your filing status is (see notes 1-3 below): Your traditional IRA deduction is reduced if your MAGI is between: Your traditional IRA deduction is eliminated if your MAGI is:
Single or head of household $56,000 - $66,000 $66,000 or more
Married filing jointly, or qualifying widow(er) $89,000 - $109,000 $109,000 or more
Married filing separately $0 - $10,000 $10,000 or more
  1. Generally, if you haven't reached age 70½ by the end of the tax year, you can contribute up to $5,000 a year to a traditional IRA if you have at least that much in taxable compensation for the year. In addition, if you are 50 or older, you can contribute an additional $1,000 as a "catch-up" contribution.
  2. Generally, if neither you nor your spouse is covered by an employer-sponsored retirement plan, the full amount of your traditional IRA contribution is tax deductible on your federal income tax return.
  3. Certain low- and middle-income taxpayers may also be eligible for a partial income tax credit for contributing to an IRA (traditional or Roth). If you qualify for such a credit, it is in addition to any income tax deduction you might receive for making the contribution. See Tax Credit for IRAs and Retirement Plans (TX10-25-5000) for more information.
  4. If any of the following apply, this summary is inadequate and you'll need to work through Step One and Step Two of this worksheet (see above) to determine the amounts that you can contribute and/or deduct:
    • You do not have at least $5,000 ($6,000 if age 50 or older) in taxable compensation for the year.
    • You are covered by an employer-sponsored retirement plan during the year of the contribution, and your MAGI falls within the applicable range listed in the middle column of the above table.
    • You are not covered by an employer-sponsored retirement plan during the year of the contribution, but your spouse is covered by such a plan.

Note: Special rules may apply to contributions by certain former Enron employees, repayments of qualified reservist distributions, and repayment of distributions by certain victims of presidentially declared natural disasters.