Question

In 2018, Susan (44 years old) is a highly successful architect and is covered by an employee-sponsored plan. Her husband, Dan (47 years old), however, is a Ph.D. student and unemployed. Compute the maximum deductible IRA contribution for each spouse in the following alternative situations.

a. Susan’s salary and the couple’s AGI before any IRA contribution deductions is $193,000. The couple files a joint tax return.

b. Susan’s salary and the couple’s AGI before any IRA contribution deductions is $123,000. The couple files a joint tax return.

c. Susan’s salary and the couple’s AGI before any IRA contribution deductions is $83,000. The couple files a joint tax return.

d. Susan’s salary and her AGI before the IRA contribution deduction is $83,000. Dan reports $5,000 of AGI before the IRA contribution deduction (earned income). The couple files separate tax returns.

Answer 1

a	Maximum deduction IRA contribution for Susan is $0
	As Susan is covered by employee sponsored plan and the
	AGI on couple's joint return is $193000 which exceed the
	phase out limit of $121000.
	Maximum deduction IRA contribution for Dan is $3,300
	Dan is not covered by any employee sponsored plan
	but Susan is covered by employee sponsored plan and the
	AGI on couple's joint return is $193000 which exceed the
	phase in limit of $189000 by $4000 thus deductible
	contribution will reduce by 40% and only 60% is deductible
	(5500 x 60% = 3300)
b	Maximum deduction IRA contribution for Susan is $0
	As Susan is covered by employee sponsored plan and the
	AGI on couple's joint return is $123000 which exceed the
	phase out limit of $121000.
	Maximum deduction IRA contribution for Dan is $5,500
	Dan is not covered by any employee sponsored plan
	but Susan is covered by employee sponsored plan and the
	AGI on couple's joint return is $123000 which is less than
	$189000 thus full deductible will be allowed $5500
c	Maximum deduction IRA contribution for Susan is $5500
	As Susan is covered by employee sponsored plan and the
	AGI on couple's joint return is $83000 which is less than
	$101000. Full deduction is allowed
	Maximum deduction IRA contribution for Dan is $5,500
	Dan is not covered by any employee sponsored plan
	but Susan is covered by employee sponsored plan and the
	AGI on couple's joint return is $83000 which is less than
	$189000 thus full deductible will be allowed $5500
d	Maximum deduction IRA contribution for Susan is $0
	As Susan is filling separately and the her AGI exceed $10000
	maximum deduction IRA contribution is $0
	Maximum deduction IRA contribution for Dan is $2,750
	Maximum contribution is $5500, but Dan's earned income is
	$5000, which is 50% above the phase in limit, thus the
	deduction will be reduced by 50% and only 50% is allowed