Charlie is a single taxpayer with income of $107,000 which includes $22,500 of interest income.Contributions to educational savings accounts are phased out between $95,000 and $110,000.What is the maximum contribution Charlie can make to an educational savings account?

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Quizplus · Accepted Answer

Charlie's income is $107,000, which is $12,000 into the phase-out range. The phase-out range is $15,000 ($110,000 - $95,000). The maximum contribution of $2,000 is reduced proportionally by the amount over $95,000. The reduction is $2,000 * ($12,000 / $15,000) = $1,600, so the maximum contribution is $2,000 - $1,600 = $400.

Charlie Is a Single Taxpayer with Income of $107,000 Which