Deductible Contribution Calculation for Rob and Julie

What is the maximum amount that Rob may deduct for contributions to his traditional individual retirement account (IRA)?

Final answer:

Rob cannot deduct any contribution to his traditional individual retirement account (IRA) because their total adjusted gross income is above the limit for deductible contributions.

Explanation:

To determine the maximum amount that Rob may deduct for contributions to his traditional individual retirement account (IRA), we need to consider his income, filing status, and whether he or his spouse is covered by a retirement plan at work.

Since Julie is covered by a qualified pension plan at work, we need to check if Rob is eligible for a full or partial deduction. Based on the given information, Rob's wages are $25,000 and their total adjusted gross income is $135,000.

Now, let's determine Rob's eligibility for a deduction based on his filing status and income:

• If Rob and Julie file a joint income tax return, the deduction limits for a traditional IRA are based on their modified adjusted gross income (MAGI).
• For 2021, if the couple's MAGI is less than $105,000, Rob can make a fully deductible contribution to his traditional IRA.
• If the couple's MAGI is between $105,000 and $125,000, Rob's deduction is gradually reduced.
• If the couple's MAGI is $125,000 or more, Rob cannot deduct any contribution to his traditional IRA.

Since their total adjusted gross income is $135,000, which is above $125,000, Rob cannot deduct any contribution to his traditional IRA.