Case Study 5: Employer Retirement Plans
Emily, 36 years old, is single, and her modified AGI was $78,000. She is covered by a retirement plan at work. Emily's $6,500 traditional IRA contribution will be reduced or modified on her tax return because her modified AGI is between $73,000 and $83,000.
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 |
$73,000 or less |
More than $73,000 but less than $83,000 |
$83,000 or more |
Married Filing Jointly or Qualifying Widow(er) |
$116,000 or less |
More than $116,000 but less than $136,000 |
$136,000 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. |