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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

Some IRA Guidance

Nov 03, 2011

I sometimes find it amazing how much misinformation can be in the mainstream news media on how working Americans can not contribute to an IRA if they are covered by a retirement plan at work.  This is simply not true.  Any farmer that has earnings in excess of $5,000 ($6,000 if over age 49 and want to take full advantage of the amount they can contribute) can contribute to an IRA no matter if they are covered by a retirement plan or how much their adjusted gross income is.

The potential drawback if covered by a retirement plan AND your income is too high, then the IRA contribution may not be fully deductible.

If you are not covered by a retirement plan, you can make a deductible IRA contribution no matter what your gross income is.  If one spouse is covered by a retirement plan, the other spouse can make and deduct an IRA if the total gross income is less than $173,000 (these are all 2012 numbers).

If both husband and wife is covered by a retirement plan, then you can still contribute to an IRA, but it is only 100% deductible if your adjusted gross income is less than $92,000.  It is phased out between $92,000 and $112,000.  For single taxpayers, the phaseout starts at $58,000 and ends at $68,000.

Remember, if y0u have earned income in excess of $6,000, you can make an IRA contribution, you just may not be able to deduct it.

 

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