 Income tax 2022-2023. Ira deduction questionnaire. Let's do some wealth preservation with some tax preparation. Support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. In a prior presentation we look at the Ira deduction in general now we're going to look at a worksheet which you can find on the form 1040 instructions at the IRS website irs.gov irs.gov helping us to calculate the actual deduction note that in practice this would often be done with the software. The software can help you to calculate this but just taking a quick look at this worksheet can help us to look at what the limitations are in terms of the max amount of the deductions possible in scenarios that are simple scenarios and scenarios that are more complex scenarios scenarios where we might also have access to say a 401k plan or a 403 B plan or we're married to someone who has access to a 401k or 403 B plan or something like that. Now remember the general scenario I think the government concept the idea the government has would be they would like everybody to be basically employees of some kind and have access to like a 401k type of plan and if you have access to the 401k plan plan what plan then you need to max out whatever you can put into that 401k plan in the taxable year that being 2022 that we are talking about here and then if you don't have access to a 401k plan that's when kind of like the IRA kicks in so you could still get some of the advantages of being able to save for retirement and have some tax benefits but it gets confusing when there's overlap in that you put money into a 401k plan can you still put money into say an IRA or if your spouse has access to a 401k plan can you put money into an IRA and you've got the income thresholds and so on and so forth. Fortunately, fortunately, you could put money into an IRA generally up until the point that you file the tax return not including extensions and therefore you can do a bit of the last minute tax planning so you want to be able to express that to the clients and obviously you would typically do a tax planning situation by using actual software not usually an actual form like this but like I say looking at it in terms of a form can get us an idea of what's going to happen so that we can communicate what's going to happen to clients when we're speaking with them so let's take a look at it. Box 1A, were you covered by a retirement plan? My lifestyle is my retirement plan. So notice if they were a single filer for example we might have W2 income and then the question is did you have access to say a 401k or a 403b or something like that which would be shown on the W2 and marked off in the software from the W2 and that can complicate whether or not we would be able to access and get more benefit but putting money into an IRA. B, if married filing jointly was your spouse covered by a retirement plan. So now when we're married that's going to add a level of complexity because even if just our spouse had access to the 401k plan depending on the income thresholds it could have an impact on how much we can put into the retirement plan or an IRA I should say we're focused on the IRA. Next if you check no online 1A and no online 1B if married filing jointly skip lines 2 through 6 enter the applicable amount below online 7A and line 7B if applicable and go to line 8. So we've got the 6000 if under age 50 so that's going to be the maximum contribution typically 6000 for an individual unless they are over age 50 where it can be boosted up to 7000. So this is one of those types of things that's kind of applied to person per person in general. So if you're married then you're still could have some some overlap in terms of the rules meaning like if your spouse has access to a 401k plan maybe it still has an impact on how much you can put in but it's also kind of separate at the same time because obviously we have two individuals which we would think could max out their their IRA contributions each. So we'd have 6000 each or 7000 each depending on the age if under 50 or older 50. So enter the amount shown below that applies to you and then we have these are kind of our thresholds now that are going to be starting to apply the income thresholds. So single head of household or married filing separate and you live apart from your spouse for all of 2022 you enter the 78000. So married filing jointly 129000 in both columns but if you checked no on either line one A or one B enter 124000 to the person who wasn't covered married filing separately and you lived with your spouse at any time during 2022 10000. So you're going to be severely limited as is often the case if filing married filing separately because the IRS is going to be kind of suspicious of those scenarios. Now I'm not going to go through each of these items more one by one so you kind of read it over if you would like to but we're going to be then kind of taking these general ideas and then applying them to tax software in a future presentation. Let's just I'll try to just kind of recap the general scenarios that might come up. So let's say you're married your spouse has a 401k and you're modified adjusted gross income. This is the adjusted gross income you know after the above the line deductions but it's kind of modified. So it's still a general idea of your adjusted gross income. In 2022 if you are married filing jointly and your spouse has a 401k you can take the full deduction for the IRA contribution as long as your modified adjusted gross income is below 204000 I believe if your modified adjusted gross income is between 204000 and 214000 you can take a partial deduction. Meaning it starts to phase out at that point. So let's say that you are married you have a 401k and your modified adjusted gross income is below the threshold. So now you're saying you have the 401k plan. So if you are married filing jointly and you have a 401k you can take the full deduction for your contribution to a traditional IRA as long as your modified adjusted gross income is 109000 or less in this situation if you're modified adjusted gross income is between 109000 and 129000 you can take a partial deduction. So then we have you are a single head of household or qualified widower. So if you have a 401k or other retirement plan at work you can take the full deduction if you're modified adjusted gross income is 68000 or less. If you're modified adjusted gross income is between 68000 and 78000 you can take a partial deduction. Note that in all of these scenarios the workplace retirement plan doesn't have to be a 401k plan. It could be a 403b or whatever kind of qualified retirement plan. That's just the kind that most people have. So that's the general concept. So then we have if either your or your spouse is covered by a retirement plan at work and your combined income exceeds the threshold set by the IRS you may not take the full tax deduction for your IRA contribution for married taxpayers filing jointly. Jointly the limit is 129000. If you have a 401k and 214000 if your spouse has a 401k for single taxpayers the limit is 78000. And of course the general IRA contribution limit is going to be the 6000 per person generally and 7000 if you are 50 or older as we can see in our worksheets here. Now again that whole scenario of course is quite complex. So the general rules would be the IRA contribution 6000 if you're under 50 7000 if you're older 50 if you're have access to a 401k plan either you or your spouse it's going to get more complicated in those scenarios. And as your income goes up you may have limited limitations and phase outs to be able to access the IRA. So you will be able to do tax planning and the software can kind of help us out with that last minute tax planning would be the general scenario that you might want to kind of have in mind when these questions come up as they do because the IRA is always going to be that last minute type of thing that you could take a look at.