Save time with our cheat sheets, fact sheets, checklists & books!

November 12, 2021

Deduction

Your Guide

Print

Deduction

Tax write-off which is allowed for contributions to traditional IRAs or employer sponsored plans.

Definition

A deduction is a Tax write-off which is allowed for contributions to traditional IRAs or employer sponsored plans.

Individuals who are active participants are eligible to deduct their traditional IRA contributions, only if their MAGI amounts do not exceed certain limits. 

 The MAGI that applies to each tax-filing status and in which the individual(s) is covered under and employer sponsored retirement plan varies each year. See this page for current limits.

See Nondeductible contribution

Referring Cite

IRC § 219(g), IRC § 404

Additional Helpful Information

  • Contributions to employer sponsored plans are deductible only if they are within statutory limits
  • The following formula is used to calculate the deductible IRA contribution amount, for an active participant ( see Active Participant)

(Highest dollar limit of MAGI range – MAGI) x(Contribution limit/{Highest dollar limit of MAGI range Lowest dollar limit of MAGI  range})

More

Keep Learning

Domestic abuse distribution

A domestic abuse distribution is one that is made to domestic abuse victim, during the 1-year period beginning on any date on which the individual

Eligible retirement plan

The term “eligible retirement plan”, means a retirement plan to which a rollover contribution can be made. These are: (i)an individual retirement account described in

Qualified See-Through Trust beneficiary

Definition A qualified trust beneficiary is a trust that satisfies the requirements so as to be treated as a designated beneficiary.   For retirement accounts inherited

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

Be among the first to know when

IRA Rules
Change