Rhonda and Ralph are married.Rhonda earns $81,000 annually,and Ralph earns $5,000 annually working part-time.Their AGI is $107,000.Rhonda participates in an employer-sponsored retirement plan.Ralph's company does not have a pension plan.Rhonda and Ralph contribute the maximum amount allowable annually to their IRAs.What is their allowable deduction for this year's contributions?

Question

Quizplus · Accepted Answer

Since Rhonda is covered by an employer-sponsored retirement plan and their AGI is $107,000, they are subject to a phase-out for IRA deductions. For 2023, the phase-out range for married couples filing jointly where one spouse is covered by a plan is $116,000 to $136,000. Since their AGI is below this range, Rhonda can deduct her full contribution of $6,500. Ralph, not covered by a plan, can also deduct his full contribution of $6,500. However, the total deduction is limited to $7,700 due to the phase-out rules.

Rhonda and Ralph Are Married