The Individual Retirement Accounts, commonly known as IRAs grant the taxpayers who contribute to a traditional or other qualifying plan a tax deduction for their contributions. This isn’t a deduction like the qualifying medical expenses though. You can claim the IRA deduction using Schedule 1 – Additional Income and Adjustments to Income. So you don’t need to itemize deductions in order to claim the IRA deduction. It’s seen as an adjustment rather than a deduction. Use Schedule 1 to subtract the IRA contributions from gross income and figure out your adjusted gross income.
Before getting to that though, make sure to claim the right amount of IRA deduction on your tax return as you will need to amend a return if mistaken.
Whether or not you can claim the full deduction for your contributions depend on your modified adjusted gross income, filing status, and whether or not you are covered by a retirement plan at work. If you have a 401k, the IRA deduction you’re eligible to claim will be lesser. Here are the MAGI thresholds for the IRA deduction if you’re covered by a retirement plan at work – meaning you have a 401k.
|Filing Status||MAGI||IRA Deduction Amount|
|Single or Head of Household||Less than $65,000|
$65,001 to $75,000
$75,001 or more
|Married Filing Jointly or Qualifying Widow(er)||Less than $104,000|
$104,000 to $124,000
$124,001 or more
|Married Filing Separately||Less than $10,000|
$10,001 or more
Taxpayers who are not covered by a retirement plan at work regardless of filing status can deduct the full amount. However, if you’re filing a joint return and your spouse is covered by a retirement plan at work, you get a full deduction only if the MAGI is less than $196,000. For a partial deduction, the MAGI must not be more than $206,000 for the 2021 tax season.