What amount can a single taxpayer with an AGI of $75,000 deduct for their IRA if they are active in a 401(k) plan?

A single taxpayer with an adjusted gross income (AGI) of $75,000 who is actively participating in a 401(k) plan faces specific rules regarding deductible contributions to a traditional IRA. For the tax year in question, the ability to deduct IRA contributions for those with active employer-sponsored retirement plans is subject to income limits.

As of the most recent tax guidelines, taxpayers who are covered by a retirement plan at work begin to face reduced deductions for their IRA contributions as their modified AGI exceeds certain thresholds. In this case, a single filer is completely phased out from deducting traditional IRA contributions once their AGI reaches $78,000. Since the AGI of $75,000 is below that threshold, the taxpayer may assume they can make a partial deduction.

However, because the taxpayer is active in a 401(k) plan, the phase-out rules apply, and it results in no deductible contribution at this AGI level. Therefore, the correct response reflects that the taxpayer does not qualify for any deduction for their traditional IRA contributions, resulting in a deductible amount of $0.

It's important to note that while the taxpayer can still contribute to a traditional IRA, those contributions would not be fully deductible. This rule ensures that individuals who