Question

-Jack (age 52) and Jill (age 49) are a married couple. Jack is covered under a qualified retirement plan at his job and earned $180,000 in 2018. Jill is employed as a lab technician and earned $42,000 but is not covered under a qualified retirement plan. They file a joint return; have interest and dividend income of $25,000. What is their maximum for AGI deduction for contributions to a traditional IRA?

A) $0

B) $5,500

C) $6,500

D) $12,000

-Reyansh is a 54-year-old an unmarried taxpayer who is not an active participant in an employer-sponsored qualified retirement plan. Before IRA contributions, his AGI is $72,000 in 2018. What is the maximum amount he may contribute to a tax deductible IRA?

A) $4,500

B) $5,000

C) $5,500

D) $6,500

-Prisha, a single 40-year-old physician, is covered by a qualified retirement plan at work. Her salary is $115,000, and her total AGI is $129,000. The maximum contribution she can make to a Roth IRA in 2018 is

A) 0.

B) $2,200.

C) $3,300.

D) $5,500.

Answer 1

1. A) $0

As Jack and Jill are filing joint return and their AGI exceeds $199,000. so they cannot make tax deductible contributions to a traditional IRA.9

2. D) $6,500

As Reyansh is 54 years old and is unmarried and his AGI is $72,000

3. B) $2,200

As Prisha is single, 40 years old physician and her total IGI is $129,000. the Maximum contribution she can make to a roth IRA in 2018 is , if the IGI is less than equal to $120,000 and is less than $135,000 then at a reduced amount of the maximum amount allowed i.e. $5,500.

the reduced amount is calculated as

1. Modified AGI (Assumed as IGI) $129,000

2. Less: std amount $120,000

3. subtracting 2 from 1 $ 9,000

4. Maximum amount $ 15,000

5. Dividing the result in 3 by 4 0.6000

6. Maximum contribution limit (as less than 50 years) $5,500

7. Multiplying 5 and 6 $ 3,300

8. Reducing 7 from 6 is the reduced amount for roth IRA $2,200