REG M4 Adjustments

Question 1

Where do AGI deductions appear on the tax form

Answer 1

Schedule 1 page 2

Question 2

What is the importance of AGI

Answer 2

Serves as a basis for computing % limitations on certain itemized deductions

Question 3

2024 Max contributions to an IRA for a single taxpayer

Answer 3

Under 50 lesser of 7,000 or earned income

Over 50 lesser of 8,000 or earned income

Question 4

2024 Max contributions to an IRA for a married taxpayer

Answer 4

Under 50 lesser of 14,000 or earned income

over 50 lesser of 16,000 or earned income

Question 5

What is the maximum amount each taxpayer con contributes to an IRA when married

Answer 5

under 50 7,000 each for 2024

over 50 8,000 each for 2024

Question 6

How are contributions to a deductible traditional IRA deducted

Answer 6

Deducted to get to AGI

Allowed for the year you made the contribution any time before April 15th

Question 7

When are deductions to an IRA limited

Answer 7

When the taxpayer participates in another type of retirement plan

Such as an employer-sponsored retirement plan

Question 8

2024 deductible limitation and phaseout to an IRA for taxpayers who also participate in an employer-sponsored retirement plan

Answer 8

For AGI

Single = 77k-87k Range = 10k

MFJ = 123k - 143k Range = 20k

MFS = 0-10k Range = 10k

Question 9

Math to find deductible limitation to an IRA for a taxpayer who also participates in an ESRP

Answer 9

START: taxpayers AGI
LESS: Phaseout threshold

=Excess over phaseout range

DIVIDE: Phaseout Range

= Phaseout %

MULTIPLY BY: Contribution amount

= Amount that CAN’T be deducted

Question 10

What is the special rule for a taxpayer who has an IRA and participates in an ESRP

Answer 10

When 1 spouse participates in the ESRP but the other does not.

Spouses not participating have different numbers for the AGI phaseout and range.

Question 11

Are contributions made to a Roth IRA deductible

Answer 11

NO

Question 12

Math to find the max amount that can be contributed to a Roth IRA (phaseout)

Answer 12

START: taxpayers MAGI
LESS: Phaseout threshold

=Excess over phaseout range

DIVIDE: Phaseout Range

= Phaseout %

MULTIPLY BY: Max allowed contribution

= Amount that CAN’T be contributed to the Roth IRA

Question 13

Can illegal payments be deducted (Bribe)

Answer 13

NO

Question 14

Can legal fees be deducted

Answer 14

Yes, but it must be related to the business

Question 15

Can illegal businesses deduct their operating exps

Answer 15

Yes (Business)

Question 16

What can drug dealers deduct

Answer 16

Only COGS (Business)

Question 17

Is political contributions and lobbying deductible

Answer 17

No

Paying money to monitor legislative activity is deductible