When contributions to a Traditional IRA are partially deductible, what term is used to describe those contributions that cannot be deducted?

When contributions to a Traditional IRA are partially deductible, the term used to describe those contributions that cannot be deducted is "nondeductible contributions." This designation refers to the portion of contributions made to an IRA that do not qualify for a tax deduction on the taxpayer's income tax return.

Understanding the distinction between deductible and nondeductible contributions is essential for tax planning and record-keeping. Nondeductible contributions can still be made to an IRA, but taxpayers must be aware that while they won’t receive an immediate tax benefit for those contributions, the funds will still grow tax-deferred until distribution. When distributions are taken in the future, the nondeductible contributions will not be taxed again, allowing for a tax-efficient strategy when withdrawing funds from the account.

Other terms provided in the choices may describe different aspects of IRA contributions but do not accurately capture the concept of contributions that do not qualify for a deduction. For instance, "partial deductible contributions" doesn't specifically define the nondeductible amount, while "tax-deferred contributions" refers to all contributions, regardless of their deductibility, and "deductions allowed" is a more general term that does not directly pertain to the IRA context. Thus, the term "nondeductible contributions