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Posted by victor on April 12, 2006, 6:58 am
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I have a conventional IRA. I understand yearly contributions
to the IRA account are deductible on your 1040 if your
earned income for year is less than $70,000.
Would an annuity (govt pension) be considered earned income
towards this $70,000 limit???
Thanks for your help!
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Posted by Phil Marti on April 12, 2006, 11:09 pm
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> I have a conventional IRA. I understand yearly contributions
> to the IRA account are deductible on your 1040 if your
> earned income for year is less than $70,000.
You misunderstand. The phaseouts of deductibility are based
on Modified Adjusted Gross Income (MAGI). See IRS
Publication 590.
> Would an annuity (govt pension) be considered earned income
> towards this $70,000 limit???
The taxable portion of your pension is part of MAGI, but it
is not earned income.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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<< The Charter and the Guidelines for submitting >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by Bill on April 12, 2006, 11:28 pm
Please log in for more thread options mouln@yahoo.com (victor) posted:
> I have a conventional IRA. I understand yearly
> contributions to the IRA account are
> deductible on your 1040 if your earned income
> for year is less than $70,000.
> Would an annuity (govt pension) be
> considered earned income towards this
> $70,000 limit???
Earned income is wages reported on W-2 or self employment
business income. An annuity is not in this category, and
cannot be used to qualify as earned income for contributions
to an IRA.
But your question is a little muddled. If you have earned
income, plus an annuity (govt pension) -- in other words, if
you're a double-dipper <g> -- then your modified AGI might
be too high to qualify. If your employer has a Retirement
Plan, the limit for full deductbility is $45,000 (partial up
to $55,000) [MFJ: $65,000/partial to $75,000]. And, if your
employer does not offer a Retirement Plan, there's no limit
[with a partal limit only if you're filing MFJ and your
spouse has a Retirement Plan, starting at $150,000].
This is a very simplified outine, with full details
available in Pub 590.
Bill
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<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by rick++ on April 14, 2006, 3:26 am
Please log in for more thread options Earned income is that you have paid social security tax on
that year. That includes W2 and Schedule C income, but not
B, D, & E. I have a fair amount of deferred income in
retirement pay, but paid the the SS tax in the year I put it
in the account, not the year I took it out.
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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