Question

In: Accounting

William is a single writer (age 35) who recently decided that he needs to save more...

William is a single writer (age 35) who recently decided that he needs to save more for retirement. His 2019 AGI before the IRA contribution deduction is $66,000

a If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution William can make in 2019?Maximum amount IRA Contribution=

b If he does participate in an employer-sponsored plan, what is the maximum deductible IRA contribution William can make in 2019?Maximum Deduction IRA Contribution=

c Assume the same facts as in part (b), except William’s AGI before the IRA contribution deduction is $76,000. What is the maximum deductible IRA contribution William can make in 2019?Maximum Deductible IRA Contribution=

Solutions

Expert Solution

Requirement a:-

William's AGI = $66,000

If William does not participate in an employer - sponsored plan, Per IRS, the maximum deductible IRA contribution that William can make in 2019 is $6,000. This $6,000 is the maximum limit that has been set forth by the Internal Revenue Serice(IRS)

Requiremnet b:-

If William does participate in an employer sponsored plan, the maximum deductible IRA contribution is calculated as :-

= (Adjusted Gross Income - Lower limit of phase out)/($Upper Limit of Phase out - $Lower limit of phase out) * Maximum Contribution

= (Adjusted Gross Income - $64,000)/($74,000 - $64,000) * Maximum Contribution

= ($66,000 - $64,000)/$10,000 * 6,000

= $2,000/$10,000 * 6,000

= 20% * $6,000

= $1,200

$6,000 - $1,200 = $4,800 maximum deduction IRA contribution.

Requirement c:-

Assuming the same facts in "b" and William's AGI before IRA contribution deduciton is $76,000, the maximum Deductible IRA contribution is "0" per IRS. For the tax year 2019, when an individual is covered by an employer sponsored plan, all income in excess of $74,000 will not be eligible to deduct any amounts in respect of the IRA contributions.

Maximum Deductible IRA contribution = 0

Please use the comments section should you have any questions.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In...
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2015, Janice opened her own office located at 2751 Waldham road, Pleasat Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice's parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election...
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In...
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2019, Janice opened her own office located at 2751 Waldham road, Pleasat Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice's parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election...
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In...
Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2018, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6789. Janice’s parents continue to provide health insurance for her under their policy. Janice wants to contribute to the Presidential Election...
Maya Chang, age 35, is a single taxpayer who lives at 1225 Primrose Lane, Austin, Texas,...
Maya Chang, age 35, is a single taxpayer who lives at 1225 Primrose Lane, Austin, Texas, 93221. Her social security number is 365-87-2012. Maya is the manager of a spa and her earnings and withholdings for 2016 are: W-2 Wages   $105,000 Federal Taxes Withheld $20,000 State Taxes Withheld $0 (Texas has no income taxes) Maya owns a single family home as a rental property at 2012 Boulder Drive, Hutto, Texas, 93110. The house is rented for the entire year at...
Consuela, age 39 and single, furnishes more than 50% of the support of her parents, who...
Consuela, age 39 and single, furnishes more than 50% of the support of her parents, who do not live with her; their only source of income are Social Security benefits of $18,000. Does Consuela qualify for head-of-household filing status? You must support your conclusion by discussing each of the requirements for that filing status and whether they are satisfied in Consuela’s case. This is the entire question. There is no case study.
A friend wants to retire in 30 years when he is 65. At age 35, he...
A friend wants to retire in 30 years when he is 65. At age 35, he can invest $500/month that earns 6% each year. But he is thinking of waiting 15 years when he is age 50, and then investing $1,500/month to catch up, earning the same 6% per year. He feels that by investing over twice as much for half as many years (15 instead of 30 years) he will have more. A. What is the future value of...
Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with...
Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with Omer for all of 2020. Omer paid all costs of maintaining the household for himself and Maria. Omer’s sister, Zelda, also lived with Omer for all of 2020. Zelda had no income, and Omer provided all of her support. In 2020, Omer had the following income items: Salary: $75,000 Interest on savings account (investment income): $2,500 Ordinary dividends (investment income; not qualified dividends): $1,500...
Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with...
Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with Omer for all of 2020. Omer paid all costs of maintaining the household for himself and Maria. Omer’s sister, Zelda, also lived with Omer for all of 2020. Zelda had no income, and Omer provided all of her support. In 2020, Omer had the following income items: Salary: $75,000 Interest on savings account (investment income): $2,500 Ordinary dividends (investment income; not qualified dividends): $1,500...
Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with...
Omer, single, age 35, has one dependent (Maria, a qualifying child, age 7) that lived with Omer for all of 2020. Omer paid all costs of maintaining the household for himself and Maria. Omer’s sister, Zelda, also lived with Omer for all of 2020. Zelda had no income, and Omer provided all of her support. In 2020, Omer had the following income items: Salary: $75,000 Interest on savings account (investment income): $2,500 Ordinary dividends (investment income; not qualified dividends): $1,500...
who are ultimate savers and borrowers? Why are savers more likely to save more when the...
who are ultimate savers and borrowers? Why are savers more likely to save more when the interest rate is high. What are the three types of demand for money by households and why is that important for investment purposes?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT