1040-US: Traditional IRA contribution data entry

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Note: For more information regarding how compensation is calculated for a married filing joint client who is contributing to an IRA, refer to Compensation calculation for computing IRA contributions for a married filing joint client .

Complete the following steps to enter a Traditional IRA contribution.

  1. In the IRA screen, choose the applicable code in the Covered by a retirement plan? field. Additional information

    If one of the following occurs, the UltraTax CS assumes that the taxpayer or spouse is covered by a qualified retirement plan when applying any AGI limitation to the contributions.

    • A Keogh, SEP, or SIMPLE contribution is present for either the taxpayer or spouse in the Keogh screen, or
    • The Retirement plan field is marked in the W2 screen.

    To force UltraTax CS to ignore these indicators and calculate the traditional IRA deductions without limitations, choose Code 2 in the Covered by a retirement plan? field. If either the taxpayer or the spouse is a participant in a qualified retirement plan and this information is not indicated anywhere else in the return, choose Code 1. UltraTax CS then calculates the Traditional IRA deduction(s) with the appropriate AGI limitations applied.

    Important! For married filing separate returns, if the taxpayer is not covered by a retirement plan but the spouse is, the taxpayer is considered covered by a plan unless they lived apart for all of the calendar year. If the Filing Status Optimization utility was used, it is important to choose Code 1 in the Covered by a retirement plan? field for each spouse to indicate they were covered by a retirement plan.
  2. Either enter the contribution amounts in the Traditional IRA Contribution field, or choose the applicable code in the Have program compute IRA deduction field.
    Note: Choosing Code 1 or Code 2 in the Have program compute IRA deduction field overrides amounts entered in the Traditional IRA contribution field.
  3. The calculation of deductible and nondeductible contributions displays on the Traditional IRA Deduction Worksheet.
    Note: If the return contains Social Security income, the deductible and nondeductible contributions are calculated on Worksheet 2 For Social Security Recipients Who Contribute To An IRA. You can view the form in the SSW folder (Worksheet 2 tab) in Forms.

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