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home / study / questions and answers / business / accounting / please note to use 2016 tax law: in 2015, susan ... Question Please note to use 2016 tax law: In 2015, Susan (44 years old) is a highly successful architect and is covered by an employee-sponsored plan. Her husband, Dan (47 years old), however, is a PH.D. student and is unemployed. Compute the maximum deductible IRA contribution for each spouse in the following alternative situations. Please help me solve these probelms and provide an explanation!

14) Susan's salary and the couple's AGI is $190,000. The couple files a joint return.

A) Susan $0; Dan $3,850

B) Susan $0; Dan $5,500

C) Susan $0; Dan $1,650

D) Susan $5,500; Dan $5,500

15) Susan's salary and the couple's AGI is $120,000. The couple files a joint tax return.

A) Susan $0; Dan $5,500

B) Susan $5,500; Dan $5,500

C) Susan $5,500; Dan $0

D) Susan $0; Dan $0

16) Susan's salary and the couples's AGI is $80,000. The couple files a joint tax return.

A) Susan $5,500; Dan $0

B) Susan $0; Dan $0

C) Susan $0; Dan $5,500

D) Susan $5,500; Dan $5,500

Explanation / Answer

As per the provisions for the Year 2016, the maximum deductible contributions for IRA in case of joint returns (if one of the spouse is covered under retirement plan at work) are subject to the following conditions:

The maximum permissible limit of contribution is $5,500.

___________

Part 14)

Susan $0; Dan $5,500 (which is Option B)

___________

Explanation:

Here, the total AGI is greater than $118,000. Therefore, Susan cannot claim the deduction of $5,500 as she is covered under the retirement plan. Dan, however, can contribute and claim a maximum deduction of $5,500.

___________

Part 15)

Susan $0; Dan $5,500 (which is Option A)

___________

Explanation:

Here, the total AGI is greater than $118,000. Therefore, Susan cannot claim the deduction of $5,500 as she is covered under the retirement plan. Dan, however, can contribute and claim a maximum deduction of $5,500.

___________

Part 16)

Susan $5,500; Dan $5,500 (which is Option D)

___________

Explanation:

Here, the total AGI is less than the limit of $98,000. Therefore, Susan is also entitled to claim deduction of $5,500 for the contribution made to IRA. Dan will continue to claim the deduction of $5,500 as in previous cases.

Amount of Modified AGI Deduction $98,000 or Less Full deduction up to the permissible contribution limit. Greater than $98,000 but less than $118,000 Partial deduction Equal to or Greater than $118,000 No Deduction

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