A. First, there's a limit on how much you can contribute each year - $5,500 ($6,500 if you'll be at least 50 years old by the end of the year) or 100% of your earned income, whichever is less.
If no workplace retirement plan
If you're not enrolled in a 401(k) or some other workplace retirement plans, you can deduct your IRA savings no matter how high your income is.
With workplace retirement plans
If you're enrolled in such a plan, the right to the IRA deduction is phased out as 2015 income rises between $61,000 and $71,000 on a single return or between $98,000 and $118,000 if you're married and file jointly with your spouse.
Spouse with little or no income
Spouses with little or no earned income can also make an IRA contribution of up to $5,500 ($6,500 if 50 or older) as long as the other spouse has sufficient earned income to cover both contributions. The contribution is tax-deductible as long as income doesn't exceed $173,000 on a joint return. You can take a partial tax deduction if your combined income is between $183,000 and $193,000.
The limits only apply if one spouse participates in an employer plan. If neither does, there are no income limits for taking a deduction.
"Above the line" deduction
The IRA deduction is an "above the line" adjustment to income, meaning you don't have to itemize your deductions to claim it. It will reduce your adjusted gross income dollar for dollar, lowering your tax bill. And your lower adjusted gross income (AGI) could make you eligible for other tax breaks, which disappear at higher income levels.
No deduction for Roth IRA
No deduction for contributions to Roth IRAs, that's the trade-off for getting tax-free withdrawals in retirement, rather than the taxable cash that comes out of traditional IRAs. People with incomes over $131,000 on a single return or $193,000 on a joint return can't even contribute to a Roth IRA, although there are no income limits on Roth conversions.
Please make sure to work with your CPA to determine the best way to take advantage of the tax deduction rules.