Income Restrictions on Education IRAs

The person who contributes to the account must have a modified adjusted gross income (AGI), as computed for the Hope Scholarship and Lifetime Learning credits, of less than $110,000 or less than $160,000 if the contributor files a joint return.

As you might expect, there is a phaseout range for contributions of from $95,000 to $110,000 for singles and from $150,000 to $160,000 for joint filers. If you fall within the range, your contribution is limited. Take the amount by which your modified AGI exceeds the lower limit of the phaseout range that applies to you, and divide it by $15,000 (or by $10,000 in the case of a joint return). The result will be a decimal number that should be multiplied by $500 to determine the amount of the contribution you can't make.