It seems that TurboTax will allow a $5500 contribution to an IRA, even though my net W-2 income was reduced by $1550 in 401(k) contributions. I mant to make the maximum allowed, without exceeding the maximum.
Almost anyone is permitted to make a full $5500 Traditional IRA contribution. The question is how much will be deductible?
As long as you have enough earned income (i.e. compensation), you can contribute up to the maximum of $5500 each year ($6500 if 50-70 1/2). Your 401(k) contributions do not reduce your allowable IRA contribution.
Even if you can contribute $5500 to an IRA, the amount you can get a tax deduction for is impacted by whether you have a retirement plan at work. Take a look at the chart below to see if your full IRA contribution is tax-deductible.
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