eBook Calculator Print Item Problem 12-39 (Lo. 4) Kathleen and Glenn decide that

Question

eBook Calculator Print Item Problem 12-39 (Lo. 4) Kathleen and Glenn decide that this is the year to begin getting serious about saving for their retirement by participating in their employers' § 401(k) plans. As a result, they each have$3,000 of their salary set aside in their qualified plans. If an amount is zero, enter "O Click here to view Exhibit 12.4, "Saver's·Credit Rate and AGI Thresholds. a. If the AGI on their joint return is $35,000, then the credit for retirement plan contributions available to Kathleen and Glenn is 6,000 x This credit, sometimes referred to as the "savers credit, is intended to encourage lower- and middle- income taxpayers to contrib to qualified retirement plans. The benefit provided by this credit is in addition to any deduction or exclusion that otherwise is availa due to the qualifying contribution. b. Kathleen and Glenn persuade their dependent 15-year-old son, Joel, to put $500 of his part-time earnings into a Roth IRA during the year. His AGI is $7,000. Doel's credit for his retirement plan contribution is

Explanation / Answer

Since they are filing a joint return and the AGI does not exceed 38,000, the credit available is 50% of their contribution subject to a maximum 4,000 (since joint return)

Their contribution = 3000*2 = 6000

Credit = 50%*6000 = 3000

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