Question

In 2020, 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.

d. Susan’s salary and her AGI are $83,000. Dan reports $6,200 of AGI (earned income). The couple files separate tax returns

What is the maximum deductible IRA contribution for both Dan and Susan?

Answer 1

Ans:

	Maximum IRA deduction
Susan	$0
Dan	$6000

For Susan- If you are married filing separartely and either spouse is covered by a plan at work then the amount of dedcution will be-

Modified AGI (MAGI) is less than $10000 - A partial deduction will be allowed

Modified AGI (MAGI) is $10000 or more - No deduction will be allowed

Therefore, Maximum deductible IRA for SUsan is $0 as she has an AGI of $83000 which is excess of the limits discussed above.

For Dan- Individual who are unemployed can contribute to IRA (Roth IRA) only if they have earned income. Here Dane have $6200 of earned income.

Deduction allowed is $6000 or the amount contributed whichever is less (If age is less than 50 years)

Deduction allowed is $7000 or the amount contributed whichever is less (If age is 50 years or more)

Dan is 47 years old that means he can contribute only upto $6000 and can claim 100% deduction. He has earned income of $6200 but lesser of $6000 or $6200 can be claimed as deduction. Dan can claim a deduction of $6000.