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Question: Charles and Stephanie are married and file a joint Form 1040, U.S. Individual Income Tax Return. Stephanie works and has a salary of $141,000. Charles, a stay-at-home grandad, does not work outside the home and is receiving Social Security ($25,000 in 2022). Their total income on Line 9 of their 1040 is $166,000. Stephanie has a retirement plan through her employer. Can Charles make a deductible contribution to an IRA in 2023?

Answer: Yes. Charles can make an IRA contribution to a Kay Bailey Hutchinson IRA by using Stephanie’s earned income to make the contribution. Even though his wife is an active participant, the couple’s combined AGI is below $218,000, which is the income threshold for MFJ IRA contributions.

Stephanie’s salary is over the contribution limit of $136,000, and since she has a plan at work, she cannot make a deductible IRA contribution. She is considered an “active participant” in her company plan and is subject to a contribution limitation on that basis.