Question

Ross and Reba are both in their 30s, and they are married. Reba earns $64,000 annually, and Ross earns $1,800 annually working part-time. Their adjusted gross income is $81,500. Reba participates in an employer-sponsored retirement plan. Ross and Reba contribute the maximum amount allowable annually to their IRAs. What is their allowable deduction for this year's contributions? a.$5,000 b.$6,800 c.$-0- d.$1,800 e.$12,000

Answer 1

$11000 (Not part of the options)

Step-by-step explanation:

Given the following information

Reba salary is $64,000 P/A

Ross salary is $1,800 P/A

Adjusted gross income is $81,500

To calculate their allowable deduction for the year's contributions:

If their spouse is an active participant in the employer sponsored retirement plan .It means that the deduction is limited MAGI. In this case, their MAGI is less than the threshold limit .Therefore 5500*2 = $11000 can be deductible .