Question

[The following information applies to the questions displayed below.) Jackson and Ashley Turner (both 45 years old) are married and want to contribute to a Roth IRA for Ashley. In 2019, their AGI is $197,100. Jackson and Ashley each earned half of the income. Use Tax Rate Schedule for reference. (Leave no answer blank. Enter zero if applicable.) a. How much can Ashley contribute to her Roth IRA if they file a joint return? Contribution to Roth IRA

Answer 1

2020 Deduction Contribution Limit:

    - Lesser of $6,000 or earned income

    - For taxpayers 50 & above, lesser of $7,000 or earned income

Proportional phase-out of full limit of for MAGI (modified AGI) between $196,000 and $206,000

A) If they file jointly Ashley may contribute = $5,340

Proportional phase-out = (197,100 - 196,000) / (206,000 - 196,000) = 1,100 / 10,000 = 0.11 or 11%

11% of 6,000 = 660

Contribution = 6,000 - 660 = 5,340

B) If Ashley files a separate return she gets zero deductible contribution, because her MAGI is greater than $10,000 (phase-out limit).

Ashley's earned income is $98,550 = $197,100 / 2

C) Same as part A.