How Much Can You Make to Contribute to an IRA?
If you aren’t covered by a retirement plan at work, you can deduct your entire annual IRA contribution limit, which is $5,500 for 2015 or $6,500 if you’re 50 or older.
You cannot contribute more than your taxable income for the year.
If you or your spouse is covered by a retirement plan at work, you can deduct your contributions based on the guidelines in the chart below.
If you accidentally contribute too much to your account, take it out again. But until you do, you’ll owe a 6% tax on the excess.
If you file a joint return you may be able to contribute to an IRA if you did not have taxable compensation, as long as your spouse did. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. See this formula.
|Tax Filing Status||Modified AGI or “MAGI”*||Eligible Deduction|
|Single, head of household, or qualifying widow(er)||$61,000 or less||$5,500 ($6,500 for those 50 and older)|
|More than $61,000 but less than $71,000||Partial deduction|
|$71,000 or more||No deduction|
|Married filing jointly and your spouse is covered by a plan at work||$98,000 or less||$5,500 ($6,500 for those 50 and older).|
|More than $98,000 and less than $118,000||Partial deduction|
|$118,000 or more||No deduction|
|Married filing jointly or married filing separately and your spouse is not covered by a plan at work||$183,000 or less||$5,500 ($6,500 for those 50 and older).|
|More than $183,000 but less than $193,000||Partial deduction|
|$193,000 or more||No deduction|
|Married filing separately with a spouse who is covered by a plan at work||Less than $10,000||Partial deduction|
|$10,000 or more||No deduction|
* What is My MAGI?
The earning limits are based something called your modified adjusted gross income (MAGI). MAGI is calculated by taking the adjusted gross income from you tax forms and adding back deductions for things like student loan interest and higher education expenses.