On Apr 8, 8:27 am, "allou...[at]hotmail.com" <allou...[at]hotmail.comwrote:

- quote -

The maximum you can contribute to an IRA is min(earned income, 4000).
Change the 4000 to 5000 is over 50. There's a special rule if your
company is going broke, and the limit may be 7000 if I remember
correctly. Formula is more complicated if you are married. Earned
income includes W2, self employment income, and perhaps combat pay
that you elect to include in earned income (though I'll have to check
on this one).

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<allout22[at]hotmail.com> wrote:

- quote -

$3,000

Note that whether it's deductible or not depends on what other income he and

Unless he has a spouse with earned income and files a joint return with her,
he has an excess contribution equal to $4,000 minus the W-2 Box 1 amount.
He must remove the excess and the earnings on it by the extended due date of
his return in order to avoid the 6% excess contribution penalty.

--
Phil Marti
Clarksburg, MD

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Hello
My brother contributed 4,000.00 to his traditional
IRA account for 2007 . His only source of income is one W2
from an employer with income in box 1 of approx. $3,000.00.
He contributed approx. $2,000.00 to an employer sponsored
401k plan . My question is the amount of earned income my
brother has in order to determine his IRA deduction . Is the
amount 5,000.00 or 3,000.00 ? Another way of stating the
question is the earned income reduced by the contribution
to the employer's 401 k plan ? If so my brother IRA deduction
becomes only 3,000 and not 4,000.00 .

Any help is greatly appreciated .

Regards Mason

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >