Adjustments

Question 1

What are the 3 types of individual retirement accounts (IRAs)?

Answer 1

Deductible traditional IRA, Roth IRA, and Nondeductible traditional IRA

Question 2

The annual maximum contribution to IRAs is limited to the lesser of:

Answer 2

$6,000 ($12,000 if MFJ) or earned income…if 50 and over, it moves up to $7,000 ($14,000 if MFJ)

Question 3

What does participation in an employer-sponsored retirement plan do to your deduction?

Answer 3

It limits your deduction (AGI limitation apply). Unmarried = $68k-78k
MFJ = $109k-129k

However, if the married taxpayer is not a participant in the plan, their AGI limitation is as follows:
MFS = $0-10k (both spouses are subject to this)
MFJ = $204k-214k

Question 4

What are the AGI phase-out ranges for a Roth IRA?

Answer 4

MFS = $0-10k
Unmarried = $129k-144k
MFJ = $204k-214k

Question 5

What are the 3 most common self-employed retirement plans, and what is the max amount a taxpayer can contribute to them each year?

Answer 5

SEP IRA - 20% of self-employment net income reduced by half of the self-employment tax deduction or $61k ($67.5k for taxpayers 50+)

SIMPLE IRA - 100% of self-employment net income reduced by half of the self-employment tax deduction or $14k ($17k for taxpayers 50+)

Solo 401(k) - same as SEP IRA

Question 6

The adjustment for education loan interest is limited to what dollar amount?

Answer 6

$2,500…all interest payments qualify for the adjustment and it is phased out for AGI between $70k-85k for unmarried and $145k-175k for MFJ