A Yes. Although investments and other “unearned” income do not count for IRA purposes, alimony does. Therefore, you can contribute up to the lesser of the alimony received in 2006 or $4,000 ($5,000 if you’re age 50 or over). Assuming you are a single filer for 2006, you can deduct your IRA contribution if you were not an active participant in an employer-sponsored retirement plan.
Tip: If you were an active participant in 2006, the deduction phases out for an AGI between $50,000 and $60,000, even if most of the income is unearned.
- Small Business Tax Deduction Strategies No matches