Tax Answers

April 12, 1994

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: On my job I contributed to a 401(k). I lost my job in February. hTC Can I make a tax-deductible IRA contribution now while I'm unemployed, even though I may get a job later on?

A: In order to make a tax-deductible IRA contribution, you (and your spouse, if married) cannot be an "active participant" in a qualified pension or profit sharing plan, which includes 401(k) plans. If, however, your adjusted gross income is below certain thresholds, you still may be able to make deductions.

Assuming you lost your job in February 1994 and funds were credited to your 401(k) account in January or February, you will not be allowed to make a deductible IRA contribution, unless your adjusted gross income is below $35,000 for a single taxpayer or $50,000 for married couples.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

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