Charlotte is age 52,married,and reported AGI of $100,000 in tax year 2014.She is an active participant in her employer's pension plan.What is the disallowed portion of her deductible IRA contribution in 2014?

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Quizplus · Accepted Answer

The phase-out range for a married taxpayer who is an active participant in an employer-sponsored retirement plan begins at $96,000 and ends at $116,000 in 2014. Charlotte's AGI of $100,000 falls within this range. Therefore, her maximum deductible IRA contribution is reduced by 50% of the excess over $96,000, which is $2,000 ($100,000 - $96,000 = $4,000 excess; $4,000 x 0.5 = $2,000). This reduces her maximum deductible IRA contribution from $5,500 to $3,500. Therefore, the disallowed portion of her deductible IRA contribution is $2,000 ($5,500 - $3,500 = $2,000).

Charlotte Is Age 52,married,and Reported AGI of $100,000 in Tax