Question

A single taxpayer contributed $6,300 to their traditional IRA on November 4, 2020. Payer is covered under their employer's retirement program. The following is the total income for 2020:

Wages: $72k

Dividends: 4.8k

Interest: 8k

Veteran ED Benefits: $5k

What is the allowable IRA deduction on their 2020 income tax return?

Answer 1

As per Income tax act, a single taxpayer person his age is more than 50 year or over can contribute up to $ 6000 limit on taxable contribution.

If a taxpayer aged over 50 years. Than additional $1000 on $6000 limit on taxable contribution.

Taxpayer traditional IRA contribution there taxable income by that amount and reduce the taxable income of the taxpayer.

In the given question person only can contribute $ 6000, not $ 6300.

The allowable IRA deduction on there 2020 is $ 6000 only.