Question

Karen, 28 years old and a single taxpayer, has a salary of $33,000 and rental income of $33,000 for the 2019 calendar tax year. Karen is covered by a pension through her employer. AGI phase-out range for traditional IRA contributions for a single taxpayer who is an active plan participant is $64,000 – $74,000. a. What is the maximum amount that Karen may deduct for contributions to her traditional IRA for 2019?

Answer 1

Answer:

$4,800

Step-by-step explanation:

The maximum contribution for traditional IRA in 2019 = $6000

Given that;

karen has a salary of $33,000 and rental income of $33,000; then total income = $66,000

AGI phase-out range for traditional IRA contributions for a single taxpayer who is an active plan participant is $64,000 – $74,000.

PhaseOut can be calculated as: $\frac{66,000-64000}{74,000-64,000} *6000$

= $\frac{2000}{10000} *6000$

= 0.2 * 6000

= 1200

Therefore, the  maximum amount that Karen may deduct for contributions to her traditional IRA for 2019 = The maximum contribution for traditional IRA in 2019 - PhaseOut

= $6000 - $1,200

= $4,800