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Carl and Angela are married and file a joint return, and both are 48 years old....

Carl and Angela are married and file a joint return, and both are 48 years old. In 2019, Carl’s salary is $70,000. Neither Carl nor Angela is covered by an employer-sponsored pension plan. Determine the maximum Traditional IRA contribution and deduction amounts in each of the following independent cases. Assume Carl and Angela do not have any other IRA’s except those noted below. a. Angela earns $28,000, and their AGI is $106,000. b. Angela does not work outside the home, and their AGI is $75,000.

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Answer #1

Traditional IRA contribution is always tax deductible if both are not an active participant in an employer-sponsored pension plan.

a. For married and filing jointly and not an active participant in a pension plan, if AGI is more than $103,000 but less than $123,000, then a partial deduction is allowable. Deduction of $6,000 can be made under this.

b. If spouse has no income and AGI is less than $193,000, then full deduction is allowable. The contribution limit is $6,000.

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