Q1. An authorized retirement fund was established according to the applicable law, the contributions to this fund is shared between the employer and employee, whereas contributions to the fund amounted to SR 30,000 and SR50,000 paid by employer and employee respectively.
Required: calculate the amount of deductible contribution if Gross salaries in the taxable year paid to employee amounted to SR100,000.
plz no handwriting or pic and short answer
Thanx
Assumed in this case assumed authorised retirement fund is Individual retirement arrangements (IRA)
Only employee contribution allowed to take as deduction in IRA. And also there are limits to claim the same. If the person is single, Then limits as follows: If Modified AGI is
" $63,000 or less -a full deduction up to the amount of
your contribution limit.
Morethan $63,000 but less than $73,000- Partial deduction
Morethan $ 73,000-No deduction."
In this case AGI = SR100,000-SR50,000(employee contribution)=SR50,000,In this case AGI and Modified AGI is same since there are no related adjustments , which is less than $63,000 so full amount will be allowed as deduction.
AGI calculates as Total income minus adjustments like contribution to IRA,alimony paid etc.
I hope this will help you.
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