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})
