Interior Design For Office
U.S fedral Tax question? ?

sue is an architect for a local firm where she receives as annual salary. she also does interior design out her home office. for 2007 sue’s gross income consisted of 70,000$ in salary and her scheduale C bottom line of $ 50,000. these are the only items affecting lines 7-22 of sue’s 2007 form 1040
supply a written answer to the following questions showing well-labeled computations.
1- What was Sue’s total income in 2007?
2-what was Sue’s adjusted Gross Income in 2007?
3-could sue make an IRA contribution?
4-could Sue take a deduction for both an IRA and a SEP( or similar)?

According to your question:
line 7 __________$70,000
line 12 _________$50,000
line 22 ________$120,000 — this is total income
line 27 __________$3,533 — one half of self employment tax (50000*.9235*.153*.5)
line 37 ________$116,467 — adjusted gross income

For Traditional IRA:
deduction phaseout for someone covered by an employer retirement plan is $52,000 to $62,000 MAGI if single or head of household or $83,000 to $103,000 MAGI if married filing jointly or qualifying widow(er). the phaseout if your spouse is covered by a retirement plan and you aren’t is between $156,000 and $166,000 MAGI. There is no phaseout if you and your spouse are not covered by an employer retirement plan.

For a Roth IRA:
phaseout between $99,000 and $114,000 MAGI for single or head of household or between $156,000 and $166,000 MAGI.

Employer contributions to a SEP-IRS will not affect the amount an individual can contribute to a Roth IRA

1) $120,000
2) $116,467
3) yes – but Traditional is deductible only if she is not covered by a retirement plan with her employer, Roth is only allowed if she is married filing jointly
4) no – a SEP IRA would mean she is covered by an employer retirement plan and her income is too high to claim a traditional IRA deduction if this is the case

Interior Design For Office

U.S fedral Tax question? ?

sue is an architect for a local firm where she receives as annual salary. she also does interior design out her home office. for 2007 sue’s gross income consisted of 70,000$ in salary and her scheduale C bottom line of $ 50,000. these are the only items affecting lines 7-22 of sue’s 2007 form 1040
supply a written answer to the following questions showing well-labeled computations.
1- What was Sue’s total income in 2007?
2-what was Sue’s adjusted Gross Income in 2007?
3-could sue make an IRA contribution?
4-could Sue take a deduction for both an IRA and a SEP( or similar)?

According to your question:
line 7 __________$70,000
line 12 _________$50,000
line 22 ________$120,000 — this is total income
line 27 __________$3,533 — one half of self employment tax (50000*.9235*.153*.5)
line 37 ________$116,467 — adjusted gross income

For Traditional IRA:
deduction phaseout for someone covered by an employer retirement plan is $52,000 to $62,000 MAGI if single or head of household or $83,000 to $103,000 MAGI if married filing jointly or qualifying widow(er). the phaseout if your spouse is covered by a retirement plan and you aren’t is between $156,000 and $166,000 MAGI. There is no phaseout if you and your spouse are not covered by an employer retirement plan.

For a Roth IRA:
phaseout between $99,000 and $114,000 MAGI for single or head of household or between $156,000 and $166,000 MAGI.

Employer contributions to a SEP-IRS will not affect the amount an individual can contribute to a Roth IRA

1) $120,000
2) $116,467
3) yes – but Traditional is deductible only if she is not covered by a retirement plan with her employer, Roth is only allowed if she is married filing jointly
4) no – a SEP IRA would mean she is covered by an employer retirement plan and her income is too high to claim a traditional IRA deduction if this is the case