Form 1040, Schedule 1, IRA deduction in ProConnect Tax

This article will help to understand how ProConnect Tax calculates the IRA deduction on Form 1040, Schedule 1, Line 20.

Before you start

• Only traditional IRA contributions are considered for this deduction.
• Taxpayers no longer need to be younger than age 70 1/2 to qualify for the deduction.

To enter traditional IRA contributions:

1. Go to the Input Return tab.
2. Select Deductions > Adjustments to Income from the left menu.
3. Enter the amount in IRA contributions (1=maximum deduction) for the taxpayer and/or spouse.
   • Enter 1 instead of an amount, to indicate that your client contributed the maximum allowed amount for their age.

How is the IRA deduction calculated?

ProConnect Tax will generate a worksheet titled IRA Deduction Worksheet (Schedule 1, Line 20) showing how the deduction was calculated based on taxpayer age, employer retirement plan coverage, modified adjusted gross income threshold (if applicable), and earned income. This worksheet can also be found in the IRS Instructions for Form 1040.

If your client made excess contributions to a traditional IRA:

1. Go to the Input Return tab.
2. Select Deductions > Adjustments to Income from the left menu.
3. Enter 1 in IRA contributions (1=maximum deduction) for taxpayer and/or spouse.
4. Enter the amount your client contributed in Contributions made (letter use only).

ProConnect Tax will calculate the maximum deductible contribution, and calculate the difference between the contributions made and contributions allowed. We'll also add a paragraph to the client letter informing your client to withdraw the excess contributions before the due date of the return to avoid a penalty.

If the return is on extension, ProConnect Tax assumes that the IRA was funded by the original due date of the return and doesn't print a paragraph in the client letter.

If your client made excess contributions to a traditional IRA and didn't withdraw them by the due date:

1. Go to the Input Return tab.
2. Select Taxes > Retirement Plan Taxes (5329) from the left menu.
3. Scroll down to the Excess Contributions to Traditional IRA section.
4. Enter the amount of 2023 excess contributions.
5. Enter the Value of IRA at 12/31.