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The following facts are given for Lucy who claims head-of-household status: Lucy is an active participant in the companys plan. MAGI is $68,000 for 2018. Lucy makes a $4,000 contribution to her traditional IRA for 2018. The nondeductible amount of the IRA contribution by Lucy for 2018 is which of the following? O A. $200 O B. $1,250 C. $2,750 O D. $4,000

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Answer #1

The non deductible amount is $1250.

Maximum contribution allowed is $5500 for year 2018. And the income limit is 63000-73000. Here Lucy's MAGI is $68000 which is $5000 more than beginning phase out limit, thus 50% is deductible and remaining is nondeductible. Deductible is 50% of $5500 ($2750) and remaining $1250(4000-2750) is nondeductible

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