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changed from 2013). Maximum contributions to traditional IRAs are not impacted by personal income, but if your modified adjusted gross income (AGI) exceeds certain limits, the maximum amount you can contribute to a Roth IRA gradually phases out:
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• For singles/heads of households the phase-out AGI range is $114,000 to $129,000 (increased from 2013's $112,000 to $127,000 range). Above $129,000, you cannot contribute to a Roth.
• For married couples filing jointly, the range is $181,000 to $191,000 (up from $178,000 to $188,000).
• Keep in mind these rules for deducting traditional IRA contributions on your federal tax return:
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• If you're single, a head of household, a qualifying widow(er) or married and neither spouse is covered by an employer-provided retirement plan, you can deduct the full IRA contribution, regardless of income.
• If you are covered by an employer plan and are single/head of household, the tax deduction phases out for AGI between $60,000 and $70,000 (up from $59,000 to $69,000 in 2013); if married and filing jointly, the phase-out range is $96,000 to $116,000 (up from $95,000 to $115,000).
• If you're married and aren't covered by an employer plan but your spouse is, the IRA deduction is phased out if your combined AGI is between $181,000 and $191,000 (up from $178,000 to $188,000).
• For more details, read IRS Publication 590 at www.irs.gov.
• Retirement Saver' Tax Credit. As an incentive to help low- and moderate-income workers save for retirement through an IRA or company-sponsored plan, many are eligible for a Retirement Savers' Tax Credit of up to $1,000 ($2,000 if filing jointly). This credit lowers your tax bill, dollar for dollar, in addition to any other tax deduction you already receive for your contribution.
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• Qualifying income ceiling limits for the Savers' Tax Credit increased in 2014 to $60,000 for joint filers, $45,000 for heads of household, and $30,000 for singles or married persons filing separately. Consult IRS Form 8880 for more information.
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• Jason Alderman directs Visa's financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney
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