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Turbo Tax entered amounts under "IRA Deduction" and also under "Retirement Savings."

Forum|Forum|7 years ago
June 5, 2019
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My daughter made a $1,200 contribution to an IRA for tax year 2017. Turbo Tax listed the $1,200 on form 1040A on line 17; "IRA Deduction." It also filled in form 8880 and used the same $1,200 amount to figure out a $600 credit.

It then inserted the $600 credit on line 34 of form 1040A as a "Retirement Savings." It seems to me that it should use either the $1,200 or the $600, but not both.

In comparison, my son contributed about the same amount to his 401K at his work for tax year 2017, but Turbo Tax did not insert any amount on line 17 of form 1040A, and only on line 34 of form 1040A. Is Turbo Tax doing this correctly?

TurboTax Deluxe Windows

Best answer by Hal_Al

Yes, TT is doing it correctly. If eligible, you may take both the IRA deduction and the Retirement savers Credit.

A 401k deduction is not entered on line 17 of 1040A. It has already been "deducted" by not being included in box 1 of the W-2. But, it is eligible for the Savers Credit. TT picks that up from box 12 of the W-2. Line 17 is only for an IRA deduction.

You son may still make an IRA contribution (in addition to his 401k contribution), but having a retirement plan at work (including a 401k) limits the deductibility of an IRA contribution. If his income is low enough*, he may still take a deduction, although it may be a reduced deduction. He may be eligible for a Roth IRA (income under $133K Single)

*$72,000 Single, $119,000 Married

P

PipiRAuthor

I just read the instructions for the worksheet for IRA deductions. Could this issue have something to do with the fact that my daughter did not have a retirement plan at work, while my son did?

Hal_AlAnswer

Employee

Yes, TT is doing it correctly. If eligible, you may take both the IRA deduction and the Retirement savers Credit.

A 401k deduction is not entered on line 17 of 1040A. It has already been "deducted" by not being included in box 1 of the W-2. But, it is eligible for the Savers Credit. TT picks that up from box 12 of the W-2. Line 17 is only for an IRA deduction.

You son may still make an IRA contribution (in addition to his 401k contribution), but having a retirement plan at work (including a 401k) limits the deductibility of an IRA contribution. If his income is low enough*, he may still take a deduction, although it may be a reduced deduction. He may be eligible for a Roth IRA (income under $133K Single)

*$72,000 Single, $119,000 Married