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TurboTax said I could deduct part of my IRA - now I have a penalty from IRS

Forum|Forum|5 years ago
February 21, 2021
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In 2018, and now again in 2020, TurboTax added part of my IRA as being deductible. I just got a notice from the IRS saying it was not and now I owe tax and penalties. I looked at 2020 and TurboTax did the same thing but for more money so I am guessing I will owe even more tax and penalties if I don't file an amended return asap. Why is TurboTax saying part of my IRA is deductible "because I have a plan at work" when I don't have a plan at work. My husband has a plan at work but I do not. Wanted to attach an image of what TurboTax is telling me but I got errors trying to save it.

TurboTax Home & Biz Windows

Best answer by Critter-3

Did the IRS letter note any other changes to your income ? If so the IRA deduction is affected by changes in the income which if the IRS is correct in that income was missing then the program did not make an error.

D

DanaB27

Please be aware that if you are filing married filing jointly then your deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels.

Please IRA Deduction if You Are NOT Covered by a Retirement Plan at Work - 2020 for details on the limits to verify if your deduction amount is correct.

Please see IRA deduction limits for additioal information.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

G

GJBoucherAuthor

Thank you @DanaB27 but I don't think I made my question/issue clear. I understand that there are limits etc. And it looks as though my spouse having coverage at work came into play here. But TurboTax still identified a portion of the IRA as qualifying as a deduction when the IRS says it should not be. How can I trust what TurboTax did this year with my IRA, which is more than in 2018, will not be rejected by the IRS as well?

Critter-3Answer

Did the IRS letter note any other changes to your income ? If so the IRA deduction is affected by changes in the income which if the IRS is correct in that income was missing then the program did not make an error.