Question

Joyce and Barry Bright are both employed and 56 years of age. In 2017 Barry earned wages of $2500; Joyce earned wages of $86530. Joyce is an active participant in her employer-maintained pension plane. The Brights plan to file a joint tax return. Their modified AGI is $10,9782. A) What is the latest date by which an IRA contribution must be made in order for it to be claimed on the Bright's 2017 return? B) Can the tax payments be claimed on Form 1040EZ? On FormA? C) What is the maximum amount Joyce and Barry can each contribute to an IRA and be able to deduct for 2017? C) are the earning from the IRA subject to federal income taxes in 2017? Explain.

Answer 1

A)

Last date to make contributions is 17th April 2018 for claiming deduction of 2017

B)

Conditions for elegibility to file Form 1040EZ:

• If taxable income is less than $ 100,000
• Dont claim any dependent
• File as single or married filing jointly

Since their AGI is more than $ 100,000 they would not be elegible to file 1040EZ and have to file Form A for 2017

Maximum amount that can be claimed as deduction is $ 6500 for both since they are above 50 years of age

C)

All withdrawls from traditional IRA are taxable. However, Taxation of traditional IRA depends upon type of contribution made. If all contributions to traditional IRA were tax-deductible, all of IRA withdrawal will be counted as taxable income. If one had any non deductible contribution than only the proportionate amount is taxable.