Question

4- Please provide examples and how to solve it

Determine the retirement savings contributions credit in each of the following cases.

Retirement Savings Contributions Credit a. A married couple filing jointly with modified AGI of $37,500 and an IRA contribution of $1,620. $1,620 b. A married couple filing jointly with modified AGI of $58,000 and an IRA contribution of $1,540. $1,540 c. A head of household taxpayer with modified AGI of $33,000 and Roth IRA contribution of $1,810. $1,810 d. A single taxpayer with modified AGI of $12,000 and an IRA contribution of $2,350. $2,350

Answer 1

As of 2019

a.A married taxpayers filling jointly may receive a credit worth 50% of their contribution to a qualifying plan or ABLE account if their combined AGI is $ 38500 or less.

So, in the given case AGI is $ 37500 .i.e less than $38500

Amount of retirement savings contribution credit is $ 1620 * 50% = $ 810.

b. A married couple filling jointly may receive a credit worth 10% of their contribution to a qualifying plan or ABLE account in their combined AGI ranges between $ 41501 & $ 64000

So, in this case AGI is $ 58000

Amount of retirement savings contribution credit is = $ 1540 * 10% = $154.

C.a heads of households tax payers may receive a 20% credit if their AGI ranges between $ 31126 & $ 48000.

In this AGI is $ 33000 & contribution is $ 1810

So, retirements savings contribution credits is = $ 1810 * 20%= $ 362.

D.Asingle tax payer may receive a 50% credit if their AGI is $19250 or less.

In this case AGI is $ 12000 & contribution is $ 2350.

So retirements savings contribution credit is = $ 2350 * 50% = $1175.