FreetaxUSA IRA Deduction Worksheet Error - Can't Find Where to Enter Spouse's Retirement Plan Coverage

This is a common issue with tax software that doesn't have a clear spouse retirement plan indicator. In FreetaxUSA, you actually need to go to the Retirement section, not through the IRA contribution screens. Look for "Retirement Plans" under the Income menu, then there should be a checkbox asking if you or your spouse are covered by an employer retirement plan. If you've already checked that box for yourself, the software might have a glitch where it's not carrying that information over to your spouse's portion of the calculation. Try going back and explicitly checking both you AND spouse are covered (even though it's just you who is covered), then unchecking and rechecking just yours. Sometimes that forces the software to recalculate properly. Remember, the IRS considers both spouses when determining IRA deduction limits, so the software needs to know about your retirement plan when calculating your wife's eligible deduction.

After struggling with similar issues last year, I found that using taxr.ai (https://taxr.ai) was super helpful for catching these kinds of worksheet and calculation errors. I uploaded my draft return from FreetaxUSA and it spotted several calculation issues including one with retirement plan contributions. It basically reviews your return before you submit it and points out things that might be wrong or that could trigger audits. For your specific issue, I think the problem might be that you need to enter the retirement plan coverage information in two places - once for you and once for your spouse. But taxr.ai can actually show you exactly where the discrepancy is happening.

I tried taxr.ai after seeing it mentioned here and it actually worked great for my FreetaxUSA return! I was having a similar issue with retirement plan reporting, though mine was about a 401k rollover. The system identified exactly where the error was happening and showed me screenshots of where to fix it in FreetaxUSA. Turns out there's a specific sequence you need to follow: first enter all retirement account information, THEN go back and indicate the retirement plan coverage status for both spouses. If you do it out of order, the software sometimes doesn't update all the dependent calculations correctly. The review also caught a missed education credit I qualified for that I would have completely overlooked. Definitely worth checking out if you're running into calculation issues.

If you're still having trouble after trying everything else, you might want to try Claimyr (https://claimyr.com). I used them to get through to an actual IRS agent about a similar worksheet calculation issue last year. They have this service where they wait on hold with the IRS for you then call you when an agent is available - you can see how it works here: https://youtu.be/_kiP6q8DX5c I was shocked when I actually got through to a helpful IRS person who explained exactly how to handle retirement plan coverage for spouses on tax software. Apparently this is one of the most common mistakes people make, and the IRS has specific guidelines for tax software companies that sometimes don't get implemented correctly.

I was totally skeptical about Claimyr, but I tried it as a last resort after fighting with FreetaxUSA for days over this exact same retirement plan coverage issue. I'm honestly shocked at how well it worked! The IRS agent I spoke with explained that for married filing jointly, if either spouse is covered by a retirement plan at work, it affects the deductibility of IRA contributions for both spouses, but in different ways. The agent walked me through the exact income thresholds and phase-out ranges that apply. Armed with this information, I went back to FreetaxUSA and realized I needed to manually review the Form 8606 section. The software was auto-generating this form incorrectly, but now I knew exactly what to look for. Saved me from making a $1,250 mistake on my return!

Have you tried clicking on the actual Form 8606 in the forms view? Sometimes tax software lets you override calculations directly on the form even when the interview questions don't give you the option. Also, FreetaxUSA has a pretty decent support team - might be worth opening a support ticket with them specifically about this issue. My experience is they usually respond within a day.

I ran into this exact problem with FreetaxUSA last month! The solution was actually in a totally unexpected place. Go to the "Federal" menu, then "Deductions and Credits," then "Adjustments." There should be a section called "IRA Contributions." In that section, there's a question about "you or your spouse being covered by a retirement plan" that affects both of your calculations. If that doesn't work, there's a workaround: enter a non-deductible IRA contribution instead. Since your wife's contributions were just for rollover purposes, they should be non-deductible anyway. You'll need to fill out Form 8606 for non-deductible contributions, but that might actually be the correct approach for your situation.

I had a very similar issue with FreetaxUSA last year! The problem is that the software sometimes doesn't properly link the retirement plan coverage between spouses when calculating IRA deductions. Here's what worked for me: Go to the "Personal Info" section first and make sure your filing status is correctly set to "Married Filing Jointly." Then, in the "Income" section, look for "Retirement Plans" and make sure you've indicated that YOU are covered by an employer plan. The key step I was missing was in the IRA contribution section itself - there should be a question that asks something like "Is your spouse covered by a retirement plan at work?" Even though you already indicated your own coverage, the software needs this information entered separately for the spouse's IRA calculations. If you still can't find it, try starting the IRA section completely over. Delete any IRA entries you've made, then re-enter them step by step. The software should ask about both your coverage AND your spouse's coverage during the interview process. Sometimes the questions get skipped if you jump around between sections too much.