The Internal Revenue Service publishes IRA deduction limits in Publication 590-A. IRA contributions may be deducted up to the lesser of the contribution limit or the annual taxable amount for the tax year, according to IRS.gov. Restrictions on deductions apply based on income and access to retirement plans at work.Continue Reading
The IRS reports that the contribution limit in 2014 and 2105 for a traditional IRA is $5,500. Account owners over age 50 may contribute as much as $6,500. Those who have access to retirement plans through their jobs or through their spouse's jobs are limited in their IRA deductions. According to Publication 590-A, a single filer with an modified adjusted gross income over $70,000 in 2014 is not eligible to deduct IRA contributions if he is covered by a retirement plan at work, such as a 401(k). This limit rises to $116,000 for taxpayers who are married and filing jointly.
Traditional IRAs are retirement savings accounts held by individuals. IRA owners cannot easily withdraw money they have saved in their accounts before age 59 1/2 without incurring a 10 percent penalty, reports CNN Money. IRA owners do not pay taxes on their deposits to a deductible IRA, but they do pay taxes at regular income tax rates on their contributions and earnings when they withdraw them in retirement.Learn more about Taxes