H&R Block Income Tax Practice Exam 2025 - Free Income Tax Practice Questions and Study Guide

Taxpayers who are active in employer-maintained retirement plans and their spouses have specific rules regarding Individual Retirement Accounts (IRAs) due to the implications these plans have on deductible contributions to IRAs. For individuals covered by an employer-sponsored retirement plan, the ability to deduct contributions to a traditional IRA may be limited based on their modified adjusted gross income (MAGI). Additionally, specific rules apply to contributions to Roth IRAs based on income thresholds and participation in employer plans.

This distinction exists because the IRS seeks to prevent high-income earners from benefiting disproportionately from tax-advantaged retirement accounts when they are already participating in employer-sponsored plans. Thus, the rules for IRAs can differ greatly for those actively engaged in such plans compared to those who are not, which is not the case for other groups like the self-employed or lower-income taxpayers who may have different contribution limits or eligibility criteria.