Question

Ty (single) would like to make a contribution to a Roth. He is 25 years old. His AGI is $200,000. He is an active participant in a retirement plan at work. This will be his first time to make a contribution to a Roth or Traditional IRA.   What can you advise him?

	a.	You are over the phase-out ranges for contributions to either a Roth or a Traditional IRA.  Congratulations on the high income!
	b.	Yes, you are eligible to make a contribution to a Roth in the full amount of $5,500.  You will have years of tax-free growth in the account.
	c.	You are eligible to make a $5,500 non-deductible contribution to a Traditional IRA. You can then do a conversion to a Roth. If you do the conversion before there are earnings in the account, none of the converted amount will be included in taxable income because you will have a basis in the Traditional of $5,500.
	d.	You are eligible to make a $5,500 non-deductible contribution to a Traditional IRA.  You can then do a conversion to a Roth. The converted amount will be included in taxable income because you took a deduction for the Traditional IRA contribution.

Hillary has Sch C profit of $50,000.  How much is Hillary's self-employment tax?  

	a.	$7,064.78
	b.	$3,865
	c.	$7,650
	d.	$5,000

Answer 1

Option A is correct  

According to IRS AGI is more than 199,000 you are over the phase out Ranges for contribution to either a Roth or a traditional IRA. They are the high income earners .they are not eligible to make a deductible contribution to IRA

2)option C is correct $7,650

Explanation

Self employment tax is a tax consisting of social security and Medicare taxes primarily for individuals who work for themselves. This tax is two parts

One is social security tax consisting of 12.4 percent

Second part Medicare taxes of 2.9percent

Total of SE tax is 15.3 percent  

So 50000*15.3/100=$7,650