Individual retirement arrangements allow you to save money for retirement in your own tax-advantaged account. If you're married, rules for IRA contributions for married filing jointly come into play. If your spouse participates in an employer plan, you might not be able to deduct your traditional IRA contributions anymore.
Separate Contribution Limits
Just because you file a joint return with your spouse doesn't mean you're limited to contributing to one IRA. Each spouse can continue to make contributions to his or her own IRA. For example, if the annual contribution limit is $6,000, each spouse can contribute $6,000 to that spouse's IRA, meaning the couple can contribute up to $12,000 for the year. However, one spouse can't contribute the entire amount to one IRA and have the other spouse not contribute at all.
Compensation Requirement Exception
The IRS generally requires that you have compensation before you can contribute to an IRA for the year. Compensation refers to money you make for working, such as wages. If you don't have compensation, you're usually prohibited from contributing. But if you file a joint return with your spouse, you can use the compensation of your spouse to justify your IRA contribution. For example, if you stay at home with the kids while your spouse works, you usually wouldn't be able to contribute to an IRA. However, if you file a joint return, you can use your spouse's compensation and contribute to your own IRA.
Imputed Employer Plan Participation
Usually, if you don't participate in an employer plan, you can always deduct your contributions to traditional IRAs, no matter how much money you make during the year. However, if you are married and your spouse participates in an employer plan, you become subject to income limits. If you exceed the limit, you can't deduct your traditional IRA contributions. However, if you file a joint return with your spouse, the limits are much higher than if you file separate returns.
When you file a joint return with your spouse, you report your total deduction for both spouses on the same line, titled "IRA Deduction." You have to use either Form 1040 or Form 1040A. For example, if you make a $3,000 deductible traditional IRA contribution and your spouse makes a $5,000 deductible traditional IRA contribution, you simply report an $8,000 tax deduction for the year.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."