Exercise 12-19 (LO. 4) Rafael and Lucy Gonzalez, married taxpayers, each contribute $2,900 to their respective § 401(k) plans offered through their employers. The AGI reported on the couple's joint return is $39,000. Click here to access the "Saver's" Credit Rate and AGI Thresholds Table. As a result, they may claim a credit for their retirement plan contributions of $ ?
Person eligible for Retirement saving contribution credit:
There are various denominations of availing the credit according to the amount to be invested.
The maximum credit availed by an individual is $2000.
If the person availing credit is married and filing joint return he will have the maximum credit amount to $4000.
As the values provided,
AGI = $ 39000
According to the threshold limits of the scheme, Rafael and Lucy can have credit to 20% of their contribution.
Total contribution = 2900 + 2900
Total contribution = 5800
Credit availed = 20% * 5800
Credit availed = $ 1160
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