If you’re married, you can file a joint tax return with your spouse or file separate returns. If your incomes are similar and you’re worried about moving into a higher tax bracket, it can make sense to file separately. It might also be a good idea if one of you normally claims a significant amount of miscellaneous deductions.
Filing a separate return can save you money at tax time, but it could affect your ability to save for retirement in an individual retirement account (IRA). If you’re married and file separately, here’s what you need to know about making IRA contributions.
Key Takeaways
- Traditional and Roth individual retirement accounts (IRAs) are tax-advantaged ways to save for retirement.
- With Roth IRAs, your income, filing status, and living arrangement affect your eligibility and contribution limits.
- With traditional IRAs, the up-front tax deduction depends on your income, filing status, living arrangement, and whether you’re covered by a plan at work.
- When using a married filing separate tax status, Roth IRA contributions are limited if the taxpayer’s MAGI is less than $10,000.
- When using a married filing separate tax status, Roth IRA contributions are not allowed if the taxpayer’s MAGI is $10,000 or more.
Saving in a Roth Could Be Difficult
Roth IRAs can be a great way to save for the future while enjoying some tax advantages. With a Roth IRA, your qualified withdrawals are tax-free. That’s an advantage if you expect to be in a higher tax bracket during retirement.
The annual contribution limit for a Roth IRA is $6,500 for 2023. For those ages 50 and older, a catch-up contribution of $1,000 is allowed. This annual contribution limit is higher in 2024, with the Roth IRA contribution limit being $7,000. The catch-up contribution of $1,000 is also allowed in 2024.
Your tax-filing status, living arrangement, and income can impact your eligibility and the amount that can be contributed to a Roth IRA. The Internal Revenue Service (IRS) uses your modified adjusted gross income (MAGI), which includes deductions and any tax penalties. The table below shows the various income and contribution limits for a Roth IRA, based on tax-filing status.
| 2023 Roth IRA Income Limits | ||
|---|---|---|
| Filing Status | 2023 MAGI | Contribution Limit |
| Married filing jointly or qualifying widow(er) | Less than $218,000 | $6,500 ($7,500 if you’re age 50 or older) |
| $218,000 to $228,000 | Reduced | |
| $228,000 or more | Not eligible | |
| Single, head of household, or married filing separately (and you didn’t live with your spouse at any time during the year) | Less than $138,000 | $6,500 ($7,500 if you’re age 50 or older) |
| $138,000 to $153,000 | Reduced | |
| $153,000 or more | Not eligible | |
| Married filing separately (if you lived with your spouse at any time during the year) | Less than $10,000 | Reduced |
| $10,000 or more | Not eligible | |
| 2024 Roth IRA Income Limits | ||
|---|---|---|
| Filing Status | 2024 MAGI | Contribution Limit |
| Married filing jointly or qualifying widow(er) | Less than $230,000 | $7,000 ($8,000 if you’re age 50 or older) |
| $230,000 to $240,000 | Reduced | |
| $240,000 or more | Not eligible | |
| Single, head of household, or married filing separately (and you didn’t live with your spouse at any time during the year) | Less than $146,000 | $7,000 ($8,000 if you’re age 50 or older) |
| $146,000 to $161,000 | Reduced | |
| $161,000 or more | Not eligible | |
| Married filing separately (if you lived with your spouse at any time during the year) | Less than $10,000 | Reduced |
| $10,000 or more | Not eligible | |
As the table shows, if you’re married filing separately, the income limits are significantly different, depending on whether or not you lived together at any time during the year.
- If you didn’t live together at all, you can contribute the full Roth IRA amount as long as your income is less than $146,000 for the 2024 tax year. This could, for example, work for divorcing couples who are still legally married.
- However, if you lived together at any time during the year, the income limit is less than $10,000, meaning that you can’t contribute anything if you made $10,000 or more.
A Traditional IRA Could Be Better
A traditional IRA doesn’t offer tax-free withdrawals in retirement, but you have the advantage of deducting your annual contributions if you fit the requirements. (There are income limitations if you or your spouse have a retirement plan—such as a 401(k) or a 403(b)—at work.) Contributing to a traditional IRA can lower your tax liability since deductions reduce your taxable income for the year.The annual contribution limit of $6,500 in 2023 and $7,000 in 2024 also applies to traditional IRAs. A $1,000 catch-up contribution is allowed each year for those ages 50 and older.
If you and your spouse file as married filing separately, however, the income limits for taking the deduction are severely limited, as the table below demonstrates. Spouses who live together can snag a partial deduction for any spouse whose MAGI is less than $10,000. However, no deduction is allowed for those whose income is above that amount. However, “If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the ‘single’ filing status,” the IRS says.
The good news is that—unlike with a Roth IRA—there is no income limitation for opening a traditional IRA when you’re married filing separately if you don’t take a tax deduction. And once in the IRA, your money will grow tax-free until you withdraw it at retirement, so you still get a tax break.
Now, let’s look at specific requirements for getting a tax deduction for contributing to a traditional IRA.
Covered by a Retirement Plan at Work? It Makes a Difference
The “retirement plan at work” provisions come in three categories for married people:
- Those with a retirement plan at work
- Those where just one spouse has a work retirement plan
- Those where neither spouse has a retirement plan at work
Have a Retirement Plan at Work
As shown in the table below, the amount that people who are covered by a retirement plan at work can deduct in traditional IRA contributions hinges on whether they filed their taxes as single, married filing jointly, or married filing separately, and on their income level.
| 2022 Traditional IRA Deduction Limits If You Are Covered by a Retirement Plan at Work | ||
|---|---|---|
| Filing Status | 2022 MAGI | Deduction |
| Single or head of household | $68,000 or less | Full deduction up to the amount of the contribution limit |
| More than $68,000 but less than $78,000 | Partial deduction | |
| $78,000 or more | No deduction | |
| Married filing jointly or qualifying widow(er) | $109,000 or less | Full deduction up to the amount of the contribution limit |
| More than $109,000 but less than $129,000 | Partial deduction | |
| $129,000 or more | No deduction | |
| Married filing separately | Less than $10,000 | Partial deduction |
| $10,000 or more | No deduction | |
| 2023 Traditional IRA Deduction Limits If You Are Covered by a Retirement Plan at Work | ||
|---|---|---|
| Filing Status | 2023 MAGI | Deduction |
| Single or head of household | $73,000 or less | Full deduction up to the amount of the contribution limit |
| More than $,73000 but less than $83,000 | Partial deduction | |
| $83,000 or more | No deduction | |
| Married filing jointly or qualifying widow(er) | $116,000 or less | Full deduction up to the amount of the contribution limit |
| More than $116,000 but less than $136,000 | Partial deduction | |
| $136,000 or more | No deduction | |
| Married filing separately | Less than $10,000 | Partial deduction |
| $10,000 or more | No deduction | |
Spouse Has a Retirement Plan at Work
If you are not covered by a retirement plan at work but your spouse is, then the income limits for taking a deduction are more generous for every taxpayer group except those who are married filing separately.
If you file separate returns, live together, and your spouse is covered by a retirement plan at their job, you’re still only eligible for a partial deduction and only for the spouse(s) whose MAGI is less than $10,000. If your income is more than $10,000, you can’t take any deduction at all.
Not Covered by a Work Plan
If a couple files separately and neither is covered by a retirement plan at work, they can take the full deduction, up to the annual contribution limit, regardless of how much they make. That’s the silver lining of having no 401(k) or other work retirement plan for spouses who live together but file separately.
Can You Contribute to an IRA If You’re Married Filing Separately?
Yes. However, your income limits for a Roth individual retirement account (Roth IRA) are much lower with this filing status. For 2022 and 2023, married individuals filing separately can only contribute to a Roth IRA if their modified adjusted gross income (MAGI) is less than $10,000. You also can’t take the full deduction if you contribute to a traditional IRA (the deduction phases out completely if you make at least $10,000).
How Does a Roth IRA Differ From a Traditional IRA?
A traditional IRA allows most filers to deduct contributions to their account; qualified distributions after age 59½ are then taxed at your ordinary-income rate. Roth IRAs, meanwhile, require you to make after-tax contributions. However, qualified distributions are tax free after you’ve reached age 59½ and have owned the account for at least five years. Unlike traditional IRAs, Roth accounts do not have required minimum distributions (RMDs).
What Is Modified Adjusted Gross Income (MAGI)?
Modified adjusted gross income (MAGI) is a measure of income used to determine IRA deduction limits or contribution limits (in the case of Roth IRAs), as well as eligibility for certain tax credits.
Adjusted gross income (AGI) is your gross earnings minus certain deductions. To calculate MAGI, add some of those deductions back to your income (such as the student loan interest deduction and foreign earned income and housing exclusions). In many cases, MAGI is the same as or close to one’s AGI.
The Bottom Line
The fact that you’re married filing separately may affect whether you can deduct traditional IRA contributions. But it doesn’t bar you from making them. If you’re set on filing separate returns in a particular tax year—and if your income is too high to contribute to a Roth—then you may have to opt for contributing to a traditional IRA instead and taking a partial or even no deduction.
Talking with a tax or financial professional can help you determine whether filing separate returns makes sense and which IRA is the right fit.