A single taxpayer with modified adjusted gross income of $28,000 makes a salary reduction contribution to her employer”s 401(k) plan of $3,000. Her retirement Saver”s Credit is:
a. Correct. Because her MAGI is not more than $28,750, her credit is $3,000 × 10%, or $300.
b. Incorrect. If her MAGI had been more than $17,250 but not more than $18,750, her credit would have been $600 ($3,000 × 20%).
c. Incorrect. She would have qualified for a $1,500 credit ($3,000 × 50%) if her MAGI had not exceeded $17,250.
d. Incorrect. While the $3,000 is excluded from gross income, this full amount is not the amount of the credit.