IRA Deduction 2021

The Individual Retirement Account contributions are tax-deductible same as the 401(k) contributions. However, there are many restrictions on IRA contributions deduction.

If you or your spouse is covered by a retirement plan at work, the deduction might be limited. If you or your spouse doesn’t have a retirement plan at work, the deduction can be claimed in full. This means all of your contributions are going to be tax-deductible.

Same as the 401(k) retirement accounts, only traditional IRA contributions grant you a deduction. Those who have a Roth IRA cannot claim a deduction for their contributions. This is because Roth IRA contributions aren’t tax-deferred accounts.

IRA Deduction with Retirement Plan at Work

There are income limits if you or your spouse is covered by a retirement plan at work. To see if you can get a deduction, you must calculate your modified adjusted gross income. This isn’t your adjusted gross income. The modified adjusted gross income basically refers to adjusted gross income with certain deductions and adjustments added back.

Calculate your MAGI to determine whether or not you can deduct IRA contributions.

IRA Contribution Income Limits

Filing StatusMAGIEligibile Deduction
SingleBelow $65,000
$65,000 to $75,000
Over $75,000
Full Deduction
Partial Deduction
No Deduction
Married Filing Jointly Below $104,000
$104,000 to $124,000
Over $124,000
Full Deduction
Partial Deduction
No Deduction
Married Filing SeparatelyBelow $10,000
Over $10,000
Partial Deduction
No Deduction
Head of HouseholdBelow $65,000
$65,000 to $75,000
Over $75,000
Full Deduction
Partial Deduction
No Deduction

If both you and your spouse isn’t covered by a retirement plan at work, you can deduct your IRA contributions regardless of how much you earn. The eligibility for the IRA contribution deduction is determined by whether or not you or your spouse is covered by a retirement plan at work and modified adjusted gross income. With that increased IRA contribution limits, you can deduct more in 2021 if you qualify for this deduction.

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