my 60 yr old taxpayer made 136.834 had a deferal of $4200 and put $7200 into IRA but it wont deduct the ira amount

[Tanyataxgirl]

My tax payer wants me to amend her return to add the deduction for her $7200 IRA contribution, I put it in the original return though and it did not deduct. Shes yelling at me because her banker said she should get the IRA to reduce her income and tax due. As I said when i put it in the original return. Am I doing something wrong?

[IRonMaN]

Hopefully the banker does banking better than taxes.  For someone that is a participant in a retirement plan, your client's income is too high to make a deductible contribution.

[Tanyataxgirl]

So I'm not wrong? The fact that she had the deferal on her w2 disallows the deduction? Because she was mad and said " well obviously the banker knows something you dont". I almost cried.....ALMOST

[Glossy847]

Phase out for a deductible IRA is $68,000 -$78,000 for a person covered by a  pension and the maximum deduction is $7,000 not $7,200  If you scroll down on the IRA worksheet it will tell you what is allowable   She doesn't qualify for a deductible IRA

[TaxGuyBill]

https://www.irs.gov/retirement-plans/plan-participant-employee/2022-ira-contribution-and-deduction-l...

As a side note, $7200?  The limit is $7000, right?  So there would be a $200 excess deferral, subject to a penalty.

[EDIT]:  Glossy beat me by 22 seconds.  😂

[Tanyataxgirl]

Great Thank you so much for your help.

[IRonMaN]

"well obviously the banker knows something you dont"

And the banker evidently knows something the IRS doesn't know.  Tell the banker to go back to whatever they are good at, like handing out free toasters for opening up an account at that bank.

[Tanyataxgirl]

😂😂

[rbynaker]

Before the COVID remodel, my local Texas Roadhouse (chain restaurant) had a sign at the host station that said something like "We made a deal with the bank:  They don't cook steaks and we don't take checks."

Not sure how bankers ended up higher on the trust totem than tax preparers.  But really all that matters is what does the used car salesman say on the subject?

[BobKamman]

Tell her to get it in writing from the banker so you can sue for defamation.  The problem will quickly go away.  Maybe the client, too.  

[Tanyataxgirl]

Update , She called me back to apologize while making a lame  excuse for the banker. Either way, I appreciate you all.

[PATAX]

@IRonMaN I may be wrong but I think the days of them handing out toasters or anything else are long gone. And until recently their interest rates were so pathetic that after you had to pay for new checks,  you may end up paying out more than you earned in interest... What a joke

[sjrcpa]

@Tanyataxgirl  A better tax saving strategy for your client is to have her make the maximum 401(k)/403(b) deferral at her job.

Of course it's too late for 2022, but she can probaly do it for 2023.

[BobKamman]

But of course, that's not a better strategy for the banker who is trying to sell her an IRA account.  

[Tanyataxgirl]

Thats what I was thinking while she was ranting about him knowing something I don't know, but she didn't even give me a chance to say anything.

[abctax55]

There are tax consequences to this - the overcontribution has to be withdrawn (should have been by 4/18/23).  The $ 7000 part - your client 'should' have known, so maybe that isn't the smart-ass banker's fault.  S/he may not have been privy to the ER coverage. 

BUT, the $ 200 - even my dog knows the max IRA limits ;-).   Make that banker cover the tax impact of the $ 200 overcontribution ??  It's probably not significant, but I'd make sure s/he & a supervisor is informed of the problem.

[PATAX]

@abctax55 I don't think she put the seven in yet, she was just thinking of it. Also if she did, wouldn't it just be a non-deductible contribution, if she had enough wages or earned income?

[PATAX]

@BobKamman @Some like to push annuities too. I wonder why

[abctax55]

@PATAX 

Re the non-deductible - possibly.  I didn't look at the math.

But unless one is in CA, or some of the other disaster declared areas the deadline for last year was 4.18.23

And as the OP was talking amended.... has to be 2022?  Right?   Have I lost it (again 😉

[PATAX]

@abctax55 I don't know, I might be losing it. I just woke up from a semi nap.

[abctax55]

@PATAX - then let's knock off for the day & go play with the dogs 🐶🐕

[PATAX]

@abctax55 Yeah that's what I'm going to do right now, take Heidi out. Been working on a monster return now that I have to complete in stages over many days. Everything is on that return even the kitchen sink, or whatever the saying is.🐕🐕☝

[BobKamman]

@PATAX  Because annuities pay commissions that are hidden from the buyer.  Around here, the bank that sold the most annuities was peddling those from the company with the worst rating, because the commissions were higher.  

[PATAX]

@BobKamman you hit a grand slam on that one Bob