Thank you for sending your diagnostic file. The reason your return shows the amount you reference of $7,700 as example, is the amount by which your overtime would be reduced.
- How the Phase-Out Works: The deduction is reduced by $100 for every $1,000 of MAGI that exceeds the $300,000 threshold.
- Let's say the overall adjusted gross income was $400,000. First you would subtract the maximum AGI allowed for a full deduction ($300,000 for MFJ). In my example this would be $100,000 in excess of the limit.
- Next you will divide $100,000 by $1,000 = $100
- Finally you multiply $100 x $100 = $10,000 | This amount is used to reduce the overtime you actually received to see if have any deduction remaining. $6,984 - $10,000 = zero deduction allowed.
Please update here if you have more questions and we will help.
@Anthonyfru
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