Per the IRS, for the tax year 2010, if a taxpayer is covered by a retirement plan at work, that taxpayers deduction for contributions to a traditional IRA is reduced or phased out if that taxpayers Modified Adjusted Gross Income is;

1. More than $80,000 but less than $109,000 for a married couple filing a joint tax return or for a qualifying widow(er).

2. More than $56,000 but less than $66,000 for a Single Individual or Head of Household.

3. Less than $10,000 for a married individual filing a separate return.

Furthermore, if taxpayer lives with his or her spouse or file a joint tax return and their spouse is covered by a retirement plan at work, but the taxpayer is not, the taxpayers deduction is phased out if their modified adjusted gross income is greater than $167,000 but less than $177,000.

For a joint filing taxpayer's whose Modified Adjusted Gross Income is greater than $177,000, the taxpayer cannot take a IRA deduction in 2010!

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Ask TaxGuru Please refer to the legal disclaimer.

Thanks! I was just thinking about the 2010 Tax Rules regarding the IRA phaseouts!

How is that Congress does not encourage all of us to invest more in an IRA and increase the 2010 phaseout limits? The current phaseouts amounts are not high enough for most taxpayers! Do you not agree with me??

Well, it does not make a big difference to me but I can see your frustration! All of us looking at reduced tax deductions and write-offs for the forseeable future. Clearly, it seems that Congress has to balance the budget and increase tax revenue for 2010!!!

More phaseouts to follow along with increase in personal tax rates just around the corner!