Case Study 5: Employer Retirement Plans
Emily, 36 years old, is single, and her modified AGI was $68,000. She is covered by a retirement plan at work. Emily's $6,000 traditional IRA contribution will be reduced or modified on her tax return because her modified AGI is between $68,000 and $78,000.
Table 1
Effect of Modified AGI on Traditional IRA Deduction
(if taxpayer is covered by employer retirement plan) |
|
Filing Status
|
A full deduction is allowed:
|
A partial deduction is allowed:
|
No deduction is allowed:
|
| Single or Head of Household |
$68,000 or less |
More than $68,000 but less than $78,000 |
$78,000 or more |
| Married Filing Jointly or Qualifying Widow(er) |
$109,000 or less |
More than $109,000 but less than $129,000 |
$129,000 or more |
| Married Filing Separately * |
|
Less than $10,000 |
$10,000 or more |
| * If the taxpayers did not live with their spouse at any time during the year, their filing status is considered Single for this purpose. |
