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How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retire- ment plan and you didn’t receive any social security bene- fits, you can figure your reduced IRA deduction by using Worksheet 1-2. The Instructions for Form 1040 and Form 1040NR include similar worksheets that you can use in- stead of the worksheet in this publication. If you or your spouse is covered by an employer retire- ment plan, and you received any social security benefits, see Social Security Recipients, earlier. Note. If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Reporting Deductible Contributions If you file Schedule 1 (Form 1040), enter your IRA deduc- tion on line 32 of that form. If you file Form 1040NR, enter your IRA deduction on line 32 of that form. You can’t de- duct IRA contributions on Form 1040NR-EZ. Self-employed. If you are self-employed (a sole proprie- tor or partner) and have a SIMPLE IRA, enter your deduc- tion for allowable plan contributions on Schedule 1 (Form 1040), line 28. If you file Form 1040NR, enter your deduc- tion on line 28. Nondeductible Contributions Although your deduction for IRA contributions may be re- duced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the Kay Bailey Hutchison Spousal IRA limit. The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Example. Tony is 29 years old and single. In 2018, he was covered by a retirement plan at work. His salary is $67,000. His modified AGI is $80,000. Tony makes a $5,500 IRA contribution for 2018. Because he was cov- ered by a retirement plan and his modified AGI is above $73,000, he can’t deduct his $5,500 IRA contribution. He must designate this contribution as a nondeductible con- tribution by reporting it on Form 8606. Repayment of reservist distributions. Nondeductible contributions may include repayments of qualified reserv- ist distributions. For more information, see Qualified re- servist repayments under How Much Can Be Contributed, earlier. Form 8606. To designate contributions as nondeducti- ble, you must file Form 8606. You don’t have to designate a contribution as nonde- ductible until you file your tax return. When you file, you can even designate otherwise deductible contributions as nondeductible contributions. You must file Form 8606 to report nondeductible contri- butions even if you don’t have to file a tax return for the year. A Form 8606 isn’t used for the year that you make a rollover from a qualified retirement plan to a tra- ditional IRA and the rollover includes nontaxable amounts. In those situations, a Form 8606 is completed for the year you take a distribution from that IRA. See Form 8606 under Distributions Fully or Partly Taxable in Pub. 590-B. Failure to report nondeductible contributions. If you don’t report nondeductible contributions, all of the contri- butions to your traditional IRA will be treated like deducti- ble contributions when withdrawn. All distributions from your IRA will be taxed unless you can show, with satisfac- tory evidence, that nondeductible contributions were made. CAUTION ! Worksheet 1-1. Figuring Your Modified AGI Keep for Your Records Use this worksheet to figure your modified AGI for traditional IRA purposes. 1. Enter your adjusted gross income (AGI) from Form 1040, line 7; or Form 1040NR, line 35, figured without taking into account the amount from Schedule 1 (Form 1040), line 32; or Form 1040NR, line 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Enter any student loan interest deduction from Schedule 1 (Form 1040), line 33; or Form 1040NR, line 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Enter any domestic production activities deduction (DPAD) from Schedule 1 (Form 1040), line 36; or Form 1040NR, line 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45; or Form 2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Enter any foreign housing deduction from Form 2555, line 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Enter any excludable savings bond interest from Form 8815, line 14 . . . . . . . . . . . . . . . . . . . . . . 6. 7. Enter any excluded employer-provided adoption benefits from Form 8839, line 28 . . . . . . . . . . 7. 8. Add lines 1 through 6. This is your Modified AGI for traditional IRA purposes . . . . . . . . . . . . . . 8. Chapter 1 Traditional IRAs Page 15