ANSWERS: 1
  • Contributions made to traditional IRAs for a non-working spouse are usually tax deductible. The taxable income of the working spouse must meet or exceed the amount of both spouse's IRA contributions.

    Calculating the Deduction

    You can deduct $1 from your taxable income for each dollar contributed to your non-working spouse's IRA.

    Filing Status

    You must file a joint return with your spouse for your spouse to contribute to a traditional IRA.

    Function

    You must file your taxes using form 1040A or form 1040 to claim the deduction. The deduction is an adjustment to income, also known as an above-the-line deduction, meaning you can take it in addition to the standard deduction.

    Considerations

    If the working spouse is covered by an employer-sponsored retirement plan, you can only deduct your contribution to a traditional IRA if your adjusted gross income is below the annual limits. For 2009, the limit is $166,000 for a full deduction and $176,000 for a reduced deduction.

    Misconceptions

    Even if you are married filing jointly, you and your spouse must maintain separate IRA accounts. IRS rules prohibit joint IRAs.

    Source:

    IRS.gov: Traditional IRA Rules

    Investopedia.com: Traditional IRA Deductibility Limits

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