Adjustments to Income

Adjustments to Income

Can I deduct my IRA contribution?

When, if ever, can I deduct moving expenses?

What's a Keogh or SEP contribution?

Can I deduct my IRA contribution?

In the early 1980s IRAs used to be very simple

Everyone with earned income can contribute up to the lesser of $2,000 or their earned income to an IRA

But fewer people can deduct their IRA contribution

Deductibility limited to lower-income workers or those not covered by pension plan

If you or spouse are covered by pension plan, deductibility may be limited

Check your W-2 form to see if you have a pension plan

An "X" mark in "Pension plan" in box 6 means you're covered by pension plan

Deductibility phased out if you or your spouse are covered by pension plan

Maximum deduction	modified Adjusted Gross Income (AGI)*
	Single	Married joint	Married separate
$2,000	$25,000	$40,000	$0
1,600	27,000	42,000	2,000
1,200	29,000	44,000	4,000
800	31,000	46,000	6,000
400	33,000	48,000	8,000
0	35,000 and above	50,000 and above	10,000 and above

* Our screwey tax code defines modified AGI to be slightly different from normal AGI

Note that IRA deductibility is severely limited for married, filing separately

This is more evidence that filing jointly is usually better

Both Republicans and Democrats claim they want to ease the above income limits for deductibility

When, if ever, can I deduct moving expenses?

Moving expenses are deductible if your move is related to your job

After you move, you must stay with the same job for at least 39 weeks (78 weeks if self-employed)

Move must be long-distance to be deductible

Complicated rule for cross-town rules, but if you move more than 100 miles you should qualify

Moving expenses used to be an itemized deduction, but now it's an adjustment to income (this is an improvement)

What's a Keogh or SEP contribution?

Keogh plans are set up by self-employed people

See "Retirement Planning for Everyone" for details

SEPs (Simplified Employee Pensions) are set up by self-employed people or small businesses

SEPs are being complemented by a new pension plan called a SIMPLE

See "Retirement Planning for Everyone" for details