Carl, Age 59, and Cindy, Age 49, Are Married and File

question 32

Short Answer

Carl, age 59, and Cindy, age 49, are married and file a joint return. During the current year, Carl had a salary of $41,000 and Cindy had a salary of $35,000. Both Carl and Cindy are covered by an employer-sponsored pension plan. Their adjusted gross income for the year is $94,000. Determine the maximum IRA contribution and deduction amounts.
$\begin{array} { c c } \text { Maximum }&\text { Maximum } \\\text { Contribution }&\text { Deduction }\end{array}$
A) $\begin{array} { c c } \$ 12,000 &&&& \$12,000 \\\end{array}$
B) $\begin{array} { c c } \$ 11,000 &&&& \$11,000 \\\end{array}$
C) $\begin{array} { c c } \$12,000 &&&& \$ 11,000 \\\end{array}$
D) $\begin{array} { c c } \$ 11,000 &&&& \$ 9,000\\\end{array}$
E) $\begin{array} { c c }\$ 13,000 &&&& \$13,000\end{array}$

• A)\(\begin{array} { c c } \$ 12,000 &&&& \$12,000 \\\end{array}\)
• B)\(\begin{array} { c c } \$ 11,000 &&&& \$11,000 \\\end{array}\)
• C)\(\begin{array} { c c } \$12,000 &&&& \$ 11,000 \\\end{array}\)
• D)\(\begin{array} { c c } \$ 11,000 &&&& \$ 9,000\\\end{array}\)
• E)\(\begin{array} { c c }\$ 13,000 &&&& \$13,000
• \end{array}\)

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Definitions:

Contingent Liability

A potential financial obligation that may arise depending on the outcome of a future event.

Likelihood

The probability or chance of an event occurring.

Contingency

An uncertain future event that could affect financial performance or outcomes.

Employee Earnings Record

A cumulative record of each employee’s gross earnings, deductions, and net pay during the year.