John (age 53 and single) has earned income of $3,300. He has$30,300 of unearned (capital...

John (age 53 and single) has earned income of $3,300. He has $30,300 of unearned (capital gain) income. c. If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2019 if he has earned income of $12,800?

Expert Solution

Determination of maximum deductible IRA contribution that John can make in 2019 if he has earned income of $12800:

-Limit of deductible contribution is lower of $5500 or income earned by him

-If the tax payer is reached the age of 50 by the end of the year then he is eligible to make an additional contribution $1000

So Limit of deductible contribution increased from $5500 to $6500

Here in the given question ,

John is a single tax payer, since older by the end of the year as his age is 53.

Therefore,

he can make a total deductible contribution

=Lower of, $6500[$5500+$1000] or income earned by him[$12800]

Thus John is allowed to make the maximum deductible IRA contribution in 2019 if he has earned income of $12800 is $6500.

ekkarill92 answered 2 years ago

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