If you are not an active participant in a retirement plan at work, such as a 401(k), you may deduct your entire traditional IRA contribution regardless of your income. If your employer offers a plan but you do not contribute to it, you may still be considered an active participant. You should check with your employer.
If you are an active participant in a retirement plan at work, you may still contribute up to $2,000 to a traditional IRA but the contributions may not be fully deductible.
Here are the income levels for making a tax-deductible contribution to a traditional IRA if you do contribute to an employer-sponsored retirement plan. (The figures represent modified adjusted gross income, or MAGI.) Deductions are phased out if income is in the indicated ranges. For example, a single filer earning under $31,000 in 1999 could deduct his or her entire contribution. If that single filer earned $35,000 in 1999, only part of the contribution could be deducted. A single filer earning $65,000 in 1999 would not be able to deduct any part of his or her contribution.
| Tax Year |
Single Filer |
Married Filing Jointly |
| 1999 |
$31,000-$41,000 |
$51,000-$61,000 |
| 2000 |
$32,000-$42,000 |
$52,000-$62,000 |
| 2001 |
$33,000-$43,000 |
$53,000-$63,000 |
| 2002 |
$34,000-$44,000 |
$54,000-$64,000 |
| 2003 |
$40,000-$50,000 |
$60,000-$70,000 |
| 2004 |
$45,000-$55,000 |
$65,000-$75,000 |
| 2005 |
$50,000-$60,000 |
$70,000-$80,000 |
| 2006 |
$50,000-$60,000 |
$75,000-$85,000 |
| 2007 |
$50,000-$60,000 |
$80,000-$100,000 |
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If you are married filing jointly, and your spouse is an active participant in an employer-sponsored retirement plan, but you are not, the following limits apply.
Married filing jointly:
- $150,000 or less MAGI - fully deductible
- $150,001-$159,999 MAGI - partially deductible
- $160,000 or more MAGI - not deductible
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