- The Internal Revenue Service limits who can make a full contribution to a Roth IRA by your modified adjusted gross income. These limits vary by filing status. For single filers, the modified adjusted gross income limit in 2007 was $99,000. For married couples filing jointly, the limit in 2007 was $156,000. If you are married, but file a separate return, you cannot make a full contribution.
- The IRS allows people whose income falls in the phaseout range to make a reduced contribution to their Roth IRA. The amount of the reduction depends on how close to the end of the phaseout range your modified adjusted gross income is. In 2007, singles with a modified adjusted gross income between $99,000 and $114,000 could make a reduced contribution. Married couples who filed jointly could make a reduced contribution if their modified adjusted gross income was between $156,000 and $166,000. Married individuals who filed separate returns could make a reduced contribution if their modified adjusted gross income was below $10,000.
- In order to convert money from a non-Roth retirement account to a Roth IRA in 2007, you needed a modified adjusted gross income below $100,000. If your modified adjusted gross income exceeded this amount, you could not convert the money to a Roth IRA. However, this rule has changed as of 2010 so that anyone can convert money to a Roth IRA regardless of income.
- The IRS uses modified adjusted gross income to determine Roth IRA eligibility. Your modified adjusted gross income is figured by adding back certain tax deductions to your adjusted gross income. Your adjusted gross income is your total taxable income, minus any adjustments to income you claim. Deductions you must add back include the traditional IRA contributions deduction, student loan interest, tuition and fees and employer-paid adoption expenses.
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