tax cr

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School

American University *

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Course

604

Subject

Accounting

Date

Nov 24, 2024

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pdf

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2

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12/12/23, 10:22 AM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 1/2 Score: 3/3 Points 100 % [The following information applies to the questions displayed below.] Rita is a self-employed taxpayer who turns 39 years old at the end of the year (2022). In 2022, her net Schedule C income was $278,000. This was her only source of income. This year, Rita is considering setting up a retirement plan. What is the maximum amount Rita may contribute to the self-employed plan in each of the following situations? Note: Round your intermediate calculations and final answers to the nearest whole dollar amount.
12/12/23, 10:22 AM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 2/2 11. Award: 0.30 out of 0.30 points b. She sets up an individual 401(k). Maximum contribution $ 61,000 References Problem Difficulty: 2 Medium Learning Objective: 13-05 Describe retirement savings account options for self-employed taxpayers and compute the limitations for deductible contributions to these accounts. b. She sets up an individual 401(k). $ Maximum contribution 61,000 Explanation: b. $61,000. Contributions to individual 401(k)s are limited to the lesser of (1) $61,000 or (2) 20% of net schedule C income (minus deduction for self-employment taxes) plus $20,500. Thus, Rita may contribute the lesser of (1) $61,000 or (2) $73,533 [$53,033 (see computation to part a) + $20,500]. So, her maximum contribution is $61,000.
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