John (age 51 and single) has earned income of $3,000. He has $30,000 of unearned

Question

John (age 51 and single) has earned income of $3,000. He has $30,000 of unearned (capital gain) income

If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2015?

If he does participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2015?

If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2015 if he has earned income of $10,000?

If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2015 if he has earned income of $10,000?

Explanation / Answer

John is not in an employer-sponsored plan, so AGI does not matter. Here, earned income is $3,000, which is maximum deduction contribution.

Now, John is in an employer's plan, so AGI does matter; below unmarried phase-out starting at $58,000, so can deduct 100% of contributions; still limited to earned income of $3,000.

John is under the phase-out range of $58,000 for unmarried taxpayer. He can deduct maximum amount of $6,000 (over age 50); His earned income of $10,000 is now greater than maximum contribution.

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