J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

8.4 IRA Deduction Restrictions for Active Participants in Employer Plan

If you are covered by an employer retirement plan, including a self-employed plan, you may be unable to make deductible IRA contributions to a traditional IRA. When you have coverage, your right to claim a full deduction, a limited deduction, or no deduction at all depends on your modified adjusted gross income (MAGI). If you are married, and your spouse has employer plan coverage for 2012 you are also considered to have coverage in most cases. However, if you file jointly and do not individually have employer plan coverage, a special MAGI phaseout rule may allow you to deduct IRA contributions even if a deduction for your spouse is limited or barred.

If you are unmarried and do not have employer plan coverage, or if you are married and neither of you has coverage, an IRA deduction of up to $5,000 ($6,000 if age 50 or older) for 2012 is allowed as long as you have compensation of $5,000 ($6,000 if age 50 or older) or more. The deduction phaseout rules do not apply, regardless of your income.

Are you an active plan participant?

Generally, you are considered to be “covered” by a retirement plan if you are an active participant in the plan for any part of the plan year ending within your taxable year. If you are an employee, your Form W-2 for 2012 should indicate whether you are covered for the year; if you are, the “Retirement plan” box within Box 13 of Form W-2 should be checked. Active participation (8.5)