We use this Worksheet to calculate the amount of your deductible contributions to traditional IRAs, as well as your maximum contributions to Roth IRAs.
Your allowable IRA deduction depends in part on data entered on the following lines of your tax return:
The "wages" line of Form 1040 or Form 1040A; and
Self-employment income information on Schedules C, F, K-1, and SE (Form 1040 only).
You should enter this data before you determine your IRA contribution. If you change any of these items, you should revisit the IRA topic.
Caution: You shouldn't override on Form 1040 the carries from Schedule C or Schedule F. If you override either of those carries, your IRA deduction might not calculate correctly.
In order to contribute to a traditional IRA, you must not have reached age 70-1/2 by the end of the year. We blank the appropriate entries on the Worksheet if you (or your spouse) has exceeded the age limit.
We compute your "compensation" as follows:
Net farm profit (from Schedule SE, line A1a);
+ Net business profit (from Schedule SE, line A2);
+ Gross receipts from Schedule C, line 1 or Schedule C-EZ, line 1 (but only if you X'd the box on Schedule C, line 1, or on Schedule C-EZ, line 1 indicating that you are a statutory employee).
+ Wages from W-2;
- Amounts shown in the "Nonqualified plans" box on W-2;
+ Other wage items (from Form 1040, line 7a);
- One half of the self-employment tax shown on Schedule SE, line B12 ;
- Keogh, SEP, and SIMPLE deduction (from Form 1040, line 28);
+ "Additional" compensation from line A7 of the IRA Worksheet;
+ Nontaxable combat pay from Form W-2;
- The foreign earned income and/or housing exclusions as computed on line 45 of Form 2555 and line 18 of Form 2555EZ.
If you're filing Form 1040A, we calculate line 7 as the amount from box 1 of Form W-2 plus the amount on line 7a of Form 1040A, less amounts shown in the "Nonqualified plans" box on W-2, plus nontaxable combat pay from Form W-2, plus "additional" compensation from line A7 of the IRA Worksheet.