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Wilson and Joan, both in their 30s, file a joint income tax return for 2015. Wilson's wages are $15,000 and Joan's wages are $23,000 for the year. Their total adjusted gross income is $38,000, and Joan is covered by a qualified pension plan at work but Wilson is not.
a.
What is the maximum amount that Wilson and Joan may each deduct for contributions to their individual retirement accounts?
b.
If Joan's wages are $88,000 for 2015, instead of $23,000, and their adjusted gross income is $103,000, what is the maximum amount that Wilson and Joan may each deduct for contributions to their individual retirement accounts?
Economic Income
The total value of all income earned, including both monetary sources and the monetary value of benefits such as stock options or health insurance.
Taxable Income
The portion of an individual's or entity's income used to determine how much tax is owed to the government in a given tax year.
House Values
The monetary worth or price of a residential property, which can fluctuate based on market conditions, location, and property features.
Distorting Taxes
Taxes that alter the allocation of resources and change consumer or producer behavior, leading away from an efficient market outcome.
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