Spousal IRA Tax Information
Spousal IRA accounts are available for married taxpayers who file jointly in most cases. Where one spouse has no compensation, the deduction is limited to the smaller of 100% of the employed spouse’s compensation or the combined annual limits.
A married couple with unequal compensation that files a joint return is limited on the deductible contributions to the IRA of the spouse with less compensation. The limit is the smaller of:
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The annual contribution limit, or
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The total compensation of both spouses, reduced by any deduction allowed for contributions to IRAs of the spouse with more compensation.
Contributions to spousal IRAs do not need to be divided equally between spouses, but neither spouse may make a contribution of more than the annual limit.
The deduction for contributions to both spouses’ IRAs may be further limited if either spouse is covered by an employer’s retirement plan.
Example - Spousal IRA Deduction - Bill and Bonnie, both under age 50, file a joint return in 2024. Bill has $60,000 in wages, and Bonnie earned $225. Neither spouse participates in another retirement plan. The couple can deduct $14,000 in IRA contributions.Assume instead that Bill and Bonnie have an AGI of $133,000 ($10,000 above the phase-out threshold), all from Bill’s wages, and Bill is an active participant in an employer plan. His deductible IRA contribution for 2024 is $3,500 (($20,000 - $10,000)/$20,000) x $7,000). Bonnie’s spousal IRA deduction limit for 2024 is $7,000 -- she is not an active participant, and the couple’s combined AGI is below the $218,000 threshold, thus allowing her a full deduction.
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