MAGI Sanity Check

[BJC]

Good afternoon,

Id appreciate some help, as I would hate to mess this up. Am I eligible to contribute to a Roth IRA?

My understanding is that our MAGI is about 160,600 and would fall below the cutoff that would prohibit contribution

-Married filing Jointly

-Gross Income 220,000

-AGI 160,000

-Contributed to: 457, 403B, 401k

None of the following except about $600 in Dividends:

Student loan interest
One-half of self-employment tax
Passive loss or passive income
IRA contributions, taxable social security payments
The exclusion for income from U.S. savings bonds
The exclusion under 137 for adoption expenses
Rental losses
Any overall loss from a publicly traded partnership

Finally, I have already filed my 2017 taxes. Would I need to amend anything if we end up contributing?

Thank you all for your help. Ive tried to do my own DD, but these are new waters to me.

[FlorenG]

Hi BJC,

In the instructions of Form 8606, page 3 you'll find the table that helps you determine if you can contribute to a Roth IRA and how much. For last year, if filling married you could contribute was $196,000 minus your MAGI with a maximum of $5,500, and then subtract to that any traditional IRA contributions. It looks that from your situation you can contribute the max ($5,500). When you put it into your account, make sure you indicate it is for 2017 (you have until April 17th, 2018 to do so.)

Since a Roth IRA contribution is not something you deduct, you don't report it either, this is not going to change your taxes and I don't think you need to correct your filing. It would be a different story if you wanted to contribute to an IRA and deduct some of it (which you can't given your high AGI) or if you were taking distributions from a retirement account.

Disclaimer: I'm not a tax specialist, so double check what I'm saying here.

Hope this helps.
 

[BJC]

Thank you so much Betsy.

I used Turbo tax and Im surprised that they dont make this number apparent. Hopefully others will weigh in as well to confirm.

[MDM]

Your MAGI calculation for Roth IRA purposes is https://www.irs.gov/publications/p590a#en_US_2017_publink1000230985
Then see Retirement Topics IRA Contribution Limits | Internal Revenue Service.

And, in case a reader is curious, the MAGI calculation for traditional IRA purposes is https://www.irs.gov/publications/p590a#en_US_2017_publink1000230489.
Then see IRA Deduction Limits | Internal Revenue Service