Apply Above-The-Line Adjustments Practice Test

In 2025, Marcus is single, age 39, and not covered by an employer retirement plan. His MAGI before any traditional IRA deduction is $85,000. He contributes $7,000 to a traditional IRA for 2025. Under current IRS rules, what is the impact of this contribution on Marcus’s adjusted gross income (AGI)?

In 2025, Chen is single and operates a sole proprietorship. His Schedule C shows a net loss of $3,500 for the year and he has no other income. Under current IRS rules, which statement is correct regarding the above-the-line deduction for one-half of self-employment tax?