IRA deduction income limits question

[grandep]

I am covered by a retirement plan (401k) at work, but my DW is not. I am confused about how to interpret the IRS guidelines regarding IRA deductions (found here: https://www.irs.gov/retirement-plans/plan-participant-employee/2018-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-not-covered-by-a-retirement-plan-at-work).

Under the "IRA Deduction if You ARE Covered by a Retirement Plan at Work" section, it says we cannot deduct our IRA contributions if our MAGI is >$101000. However, in the "IRA Deduction if You Are NOT Covered by a Retirement Plan at Work" section, it says that if we are "married filing jointly with a spouse who is covered by a plan at work" then our contributions ARE deductible as long as our MAGI is <$189000.

So what is my scenario, as far as the IRS is concerned? On one hand, I AM covered by a retirement plan at work, so I would think to consult the first section, where I would find that the income limit is $101000. However, if my wife were to be browsing their website, she would consult the second section and see that the income limit is $189000. Since we only file one return when we file jointly, who's "perspective" do we use?

[CoffeeAndDonuts]

I believe you can make a deductible contribution for your wife.

I wish it were an IRS example but I thought this helped me understand how to read the table better. I'm not aware of any changes to this for 2018 aside from usual inflationary adjustments for things like phase outs.

https://www.marketwatch.com/story/how-to-take-advantage-of-spousal-iras-2015-02-24

[terran]

IRAs are individual accounts. You cannot contribute for your wife, your wife may contribute for herself based on your earned income. As such, you should use her perspective for her IRA (she is eligible for a deduction), and your perspective for your IRA (you are not eligible for a deduction). So your joint return can have a deduction up to $5500 for her deductible IRA contribution.

[grandep]

IRAs are individual accounts. You cannot contribute for your wife, your wife may contribute for herself based on your earned income. As such, you should use her perspective for her IRA (she is eligible for a deduction), and your perspective for your IRA (you are not eligible for a deduction). So your joint return can have a deduction up to $5500 for her deductible IRA contribution.

That makes perfect sense - thank you for elucidating this for me. Leave it to the IRS to obfuscate something that can be explained so simply in 3 sentences

[Jedi_Monster]

I know this is an old topic, but just to be sure, this would have nothing to do with who files the taxes? Be it the spouse with or without a retirement plan?

[terran]

I know this is an old topic, but just to be sure, this would have nothing to do with who files the taxes? Be it the spouse with or without a retirement plan?

Correct, it doesn't matter who is the taxpayer and who is the spouse. IRAs are individual accounts, so consider them from the perspective of the account owner.

If Jedi_Monster is covered by a retirement plan at work and Jedi_Monster_Spouse does not, then Jedi_Monster is subject to the IRA deduction limits for those covered by a retirement plan at work and Jedi_Monster_Spouse is subject to the IRA deduction limits for those NOT covered by a retirement plan at work. Also, Jedi_Monster_Spouse can contribute (if total MAGI is below the limit) even without any earned income as long as Jedi_Monster has enough earned income to support all contributions, and vice versa. All of this stays the same whether Jedi_Monster or Jedi_Monster_Spouse is the taxpayer.

[Jedi_Monster]

Thanks for clarifying

[Padonak]

Ptf

[MustacheAndaHalf]

To reinforce what terran said with a quote from the IRS website, look under "I want to set up an IRA for my spouse. How much can I contribute?" on this page:
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-contributions

"If you file a joint return and have taxable compensation, you and your spouse can both contribute to your own separate IRAs.

Your total contributions to both your IRA and your spouse’s IRA may not exceed your joint taxable income or the annual contribution limit on IRAs times two, whichever is less. It doesn't matter which spouse earned the income."