Deduction

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Deduction

Definition

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 is as follows:

Tax Filing Status	2007 MAGI	2008 MAGI	Allowed deduction
Single	$52,000 or less	$53,000 or less	100%
	$52,000 - $62,000	$53,000 - $63,000	Partial
	$62,000 or more	$63,000 or more	None
Married filing jointly and active	$83,000 or less	$85,000 or less	100%
	$83,000- $103,000	$85,000 - $105,000	Partial
	$103,000 or more	$105,000 or more	None
Married filing jointly. Not active, but spouse is active	$156,000 or less	$159,000 or less	100%
	$156,000 - $166,000	$159,000-$169,000	Partial
	$166,000 or more	$169,000 or more	None
Married filing separately	Less than $10,000	Less than $10,000	Partial
Married filing separately	$10,000 or more	$10,000 or more	None

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})

Deduction

Definition

Referring Cite

Additional Helpful Information

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