Virtually all working Americans can contribute up to $2,000 per year to an IRA, while one-income couples can contribute up to $2,250 per year. Money in an IRA compounds, tax-free, until withdrawal.
The difference, though, is that your IRA contributions may not be fully tax deductible, as they were before. If you or your spouse are covered by a Keogh or qualified corporate retirement plan, the following rules apply.
You may deduct the maximum contribution to an IRA if your adjusted gross income (AGI) is less than $52,000 (couple) or $32,000 (individual), even if you, your spouse, or your employer contributes to an employer’s retirement plan. If you file jointly, you lose the deduction for $200 of your possible $2,000 contribution for each $1,000 of adjusted gross income over $52,000, and so does your spouse.
If you file as an individual, you lose the deduction for $200 of our possible $2,000 contribution for each $1,000 of adjusted gross income over $32,000.
A deductible minimum of $200 may be any couple or individual whose AGI falls within $1,000 of the deduction phase out limit.
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