Detailed Answer
(a) The requirement is to determine the Whites’ allowable
IRA deduction on their 2012 joint return. For married taxpayers
filing a joint return for 2012, up to $5,000 ($5,500 for
2013) can be deducted for contributions to the IRA of each
spouse (even if one spouse is not working), provided that the
combined earned income of both spouses is at least equal to the
amounts contributed to the IRAs. Even though Val is covered by
his employer’s qualified pension plan, the Whites are eligible for
the maximum deduction because their gross income of $55,000 +
$4,000 = $59,000 does not exceed the base amount ($92,000) at
which the maximum $5,000 deduction would be reduced. Also
note that Pat’s $4,000 of taxable alimony payments is treated as
compensation for purposes of qualifying for an IRA deduction.
Since they each contributed $5,000 to an IRA account, the allowable
deduction on their joint return is $10,000.