Sally put $4,000 in her traditional IRA this year.If Sally is in the 25 percent marginal tax bracket,the government actually contributed ____ of that amount for her.

Question

Quizplus · Accepted Answer

Contributions to traditional IRA accounts are tax-deductible, meaning they lower an individual's taxable income for the year. In this case, since Sally is in the 25 percent marginal tax bracket and contributed $4,000 to her traditional IRA, she can deduct $1,000 from her taxable income. This means that the government effectively contributed $1,000 towards her IRA. Therefore, choice A is the correct answer.

Sally Put $4,000 in Her Traditional IRA This Year