Compensation does not include earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation.

The most you can contribute to your traditional IRA for any year is the smaller of $4,000 or your taxable compensation for the year. If neither you nor your spouse is covered by a qualified retirement plan at any time during the year, your contributions will be fully deductible.

If you are covered by a qualified retirement plan, your IRA deduction may be reduced or eliminated, depending on the amount of your income and your filing status. If you are not covered by a retirement plan but your spouse is, you may have a full deduction. If your spouse has less compensation than you, you can contribute to a separate spousal IRA on his/her behalf, if you file a joint return and your spouse is under age 70½ at the end of the year. Your total contribution to both your IRA and the spousal IRA is limited to the smaller of $8,000 or your combined taxable compensation. You cannot contribute more than $4,000 to either IRA for the year. Contributions to traditional IRAs reduce the limit for contributions to Roth IRAs.

The deadline for making a contribution to a traditional IRA for the year is the due date of your return, not including any extensions of time to file.

You may choose to take the deduction on a return filed before the contribution is actually made, provided you make the contribution by the due date of that return, not including extensions.

Amounts you withdraw from your IRA are fully or partially taxable in the year you withdraw them. If you made only deductible contributions, withdrawals are fully taxable. If you made any nondeductible contributions, withdrawals are partially taxable. Use IRS Form 8606 to figure the taxable portion of withdrawals.

Amounts you withdraw before you reach age 59½ may be subject to a 10% additional tax. You also may owe an additional tax if you do not begin to withdraw minimum distribution amounts by April 1st of the year after you reach age 70½.