For married couples who file their taxes jointly, limits on deducting IRA contributions depend on whether the IRA holder is covered by an employee retirement plan.

For a couple who files a joint tax return and who is also covered by an employer plan, there is a phase-out that begins at a modified adjusted gross income (MAGI) of $89,000 in 2009 and 2010. As income within this range rises, the deductibility of contributions falls, so that at $20,000 above the phase-out point, deductibility falls to $0. Thus, for example, a married couple filing jointly and with a MAGI over $109,000 in 2009 or 2010 will not be able to deduct anything at all.

If just one spouse is covered by an employer plan, that spouse is subject to the rule above. The spouse not covered has a phase-out point beginning at $167,000 of joint MAGI (up from $166,000 in 2009). Deductibility is reduced as MAGI rises. At $177,000, deductibility drops to $0.

IRS Publication 590 provides worksheets to help you with your calculations.

Because the income growth that an IRA makes is tax-deferred, financial advisors often suggest putting as much as legally possible into your IRA, no matter how much you are allowed to deduct from your taxable income. The extent of deductibility does not affect the tax-free status of your IRA’s earnings.