Question
In: Accounting
Gary is age 55 and married. He files a joint tax return and is an active...
Gary is age 55 and married. He files a joint tax return and is an active participant in his employer’s 401(k) plan. What is the maximum tax-deductible IRA contribution he can make in 2020 if his AGI is $124,000?
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Expert Solution
Answer :
Maximum tax deduction IRA contribution Gary can make in 2020 if his AGI is $ 124000 will be $ 7000
Explanation :
If taxpayer is participant in a company sponsored retirement plan , his / her IRA deduction will be subject to the income limitations listed in the section below :
For 2020 , The IRA deduction is phased out between $ 104000 and $ 124000 if filinf jointly which means modified AGI over $ 124000 allows no deduction.
An eligible taxpayer in 2020 may take an IRA deduction for contributions to a traditional IRA in amounts upto $ 6000 for those whose age is upto 49 and $ 7000 for those age 50 and older .
It is given that Gary is age 55 and married . He files a joint tax return and is an active participant in his employee 401K plan . As he satisifies the basic requirement listed above , he becomes an eligible person to claim ira contribution deduction in 2020 . As gary is above 55 years of age , maximum tax deduction IRA conrtibution Gary can make in 2020 if his AGIU is $ 124000 will be $ 7000
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