Deductible IRA?

[thomtax]

Using Drake software, I have entered an amount for a deductible IRA for the taxpayer. The spouse, a W2 employee is covered by a retirement plan, but the taxpayer is self employed and has no retirement plan. The software and support person for Drake are telling me that a deductible IRA cannot be set up for the taxpayer since the wife is in a retirement plan at work. I have looked at TTB and even looked at the publication on the IRS website and can find no mention of this.

Is this information correct and can you tell me where to find the information about disallowing this deduction?

Thanks.
LT

[DaveO]

Enter the IRA contribution on the 8606 instead of the adjustment screen and you should be fine.

[BP.]

TTB 13-11 - "Reduced IRA Deduction."

[thomtax]

Dave - Thanks, using that form worked right. Must be some special something about the adjustment screen. I'm a little frustrated with the support tech. He was so adamant that you cannot take a deductible IRA if wife has retirement plan at work. And they are nowhere near phase out.

BP - Thanks - they are nowhere near phaseout. What I was looking for was the statement of no deductible IRA if wife had employer retirement plan. It turns out the tech's info was wrong.

LT

[Peachie]

LT, I have a ?

You say that the IRA is deductible right? An 8606 s used for a nondectible IRA. What am I missing? Thanks.

Peachie

[thomtax]

I can't explain how the software works. But, I went to the 8606 entry screen. For T/S, I entered T - the spouse is the one with retirement plan. I did not check the box for being covered by a retirement plan. I then entered $2000 for the slot for total IRA contributions for the year and did not select any amount to be non-deductible. Everything else left blank. The software then calculated the deductible amount and entered $2000 onto line 32 of the 1040.

LT

[Peachie]

I got it now.

I see what you are saying. It is deductibble but the software had you use the 8606 for calculation purposes. I just wanted to be sure I wasn't misinterpreting your message.

Thank you.

Peachie

[DaveO]

Glad that worked for you. I fired off a quick answer without considering the limits because I figured you would have already looked at that. Don't know if it's a quirk in the software or just a programming thing but I've noticed this the last couple years.