Concerning individual retirement accounts (IRAs),
I.A single taxpayer that is an active participant in a qualified plan and has adjusted gross income of $66,000 may contribute and deduct up to $5,500 of the annual contribution.
II.A taxpayer who is not an active participant and whose spouse does not work may contribute $11,000 into two separate IRAs but can only deduct $5,500 for AGI.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Concerning individual retirement accounts (IRAs),
I.A single taxpayer that is an active participant in a qualified plan and has adjusted gross income of $66,000 may contribute and deduct up to $5,500 of the annual contribution.
II.A taxpayer who is not an active participant and whose spouse does not work may contribute $11,000 into two separate IRAs but can only deduct $5,500 for AGI.​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Both statements are incorrect. For statement I, the ability to deduct IRA contributions for an active participant in a qualified plan is phased out at certain income levels, but the exact amount can vary by tax year and is subject to IRS rules, which may not match the $66,000 figure exactly. For statement II, if a taxpayer is not an active participant in a retirement plan and files jointly with a spouse who also does not participate in a plan, they can typically contribute and deduct the full amount to each of their IRAs, subject to the annual contribution limits and their income, not limited to deducting only $5,500 for AGI when contributing $11,000.

Concerning Individual Retirement Accounts (IRAs)