Phil, age 30, is married and files a joint return with his spouse. On February 15, 2023, Phil establishes a traditional IRA for himself and a spousal IRA for his spouse with a $12,000 contribution, $6,000 for himself and $6,000 for his wife. Phil’s spouse earned $4,000 in 2022 from a part-time job, and their combined AGI is $75,000. Neither Phil nor his spouse is an active participant in an employer-sponsored retirement plan.
a. What amount of the contribution is deductible?
b. To what year does the contribution apply? (Assume that an election is made to treat Phil’s spouse as having no compensation.)
c. Is the deduction reported as for AGI or from AGI?
d. How would your answer to Part a change, if at all, if Phil and his spouse were active
participants in an employer-sponsored retirement plan?
e. If a portion of the contribution is nondeductible in Part d, is it possible for Phil to make
a deductible and a nondeductible contribution in the same year? Explain.
f. How would your answer to Part a change if Phil and his spouse’s combined AGI were
$140,000 in 2022 and Phil was an active participant in an employer-sponsored retirement
plan?