Puri is a self-employed Spanish teacher. Her earnings from self-employment before the Keogh deduction but after deducting half of the self-employment tax are $120,000. What is her maximum deductible Keogh contribution for 2015?

Question

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For 2015, the maximum deductible contribution to a Keogh plan is 20% of net earnings from self-employment. After deducting half of the self-employment tax, Puri's net earnings are $120,000. Therefore, her maximum deductible Keogh contribution is 20% of $120,000, which is $24,000.

Puri Is a Self-Employed Spanish Teacher