Author Topic: Spousal IRA  (Read 1434 times)

mrl

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Spousal IRA
« on: January 19, 2017, 01:16:55 PM »
I am a SAHD with no W-2 income. I do have investment income. We file jointly. My wife has plenty of W-2 income. In the past we have contributed to my Roth based upon the IRS's spousal IRA provision. This year, I was considering instead of contributing to my Roth, contributing to a regular IRA in my name. Would this lower her W-2 income for tax purposes in the same way that it would if she was contributing in her own name?

Thanks

dandarc

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Re: Spousal IRA
« Reply #1 on: January 19, 2017, 01:24:48 PM »
Assuming you are eligible to deduct, then yes, your joint taxable income will be reduced.

See table 1-3 here for the rules (2016).

https://www.irs.gov/publications/p590a/ch01.html

terran

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Re: Spousal IRA
« Reply #2 on: January 19, 2017, 02:08:14 PM »
Assuming your wife is covered by a retirement plan at work and you are not your joint MAGI will have to be under $184k for you to make a deductible IRA contribution: https://www.irs.gov/retirement-plans/plan-participant-employee/2016-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-not-covered-by-a-retirement-plan-at-work

Under these assumptions she can make a deductible IRA contribution only if your joint MAGI is under $98k: https://www.irs.gov/retirement-plans/plan-participant-employee/2016-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work

If neither of you is covered by a retirement plan at work then there are no income limits to making a deductible IRA contribution.

MDM

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Re: Spousal IRA
« Reply #3 on: January 19, 2017, 02:16:02 PM »
Would this lower her W-2 income for tax purposes in the same way that it would if she was contributing in her own name?
On the off chance that you meant that question literally, the answer is "yes, not at all."

In other words, a traditional IRA doesn't lower anyone's W-2 income.  If you can deduct a tIRA contribution as noted previously, then those contributions will decrease your Adjusted Gross Income (which is probably what you meant...).

mrl

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Re: Spousal IRA
« Reply #4 on: January 19, 2017, 04:45:58 PM »
Would this lower her W-2 income for tax purposes in the same way that it would if she was contributing in her own name?
On the off chance that you meant that question literally, the answer is "yes, not at all."

In other words, a traditional IRA doesn't lower anyone's W-2 income.  If you can deduct a tIRA contribution as noted previously, then those contributions will decrease your Adjusted Gross Income (which is probably what you meant...).

Yes, that is what I meant - had been reading IRS instructions for a while, thus rendering me brain-dead. I had read that she "COULD" make the contribution for me, but hadn't seen anywhere that it was clearly stated that it "WOULD" reduce her (our) AGI, thus making it better in our case than a Roth contribution at this time.