What amount can Aubrey deduct as a traditional IRA contribution on her 2023 Form 1040 after recharacterizing her Roth IRA contribution?

To understand why the amount Aubrey can deduct as a traditional IRA contribution on her 2023 Form 1040 is $4,000, it’s essential to consider the contribution limits and the concept of recharacterization.

In the case of individual retirement accounts (IRAs), individuals can contribute to either a traditional IRA or a Roth IRA, or both, but there are limits on the total amount that can be contributed each year. For the year 2023, the contribution limit for an individual under age 50 is $6,500, and for those age 50 or older, it's $7,500.

Recharacterization allows an individual to change the nature of their IRA contribution. For instance, if Aubrey initially contributed to a Roth IRA but later has this contribution recharacterized as a traditional IRA contribution, that recharacterization essentially retroactively treats the contribution as if it were made to the traditional IRA.

Assuming Aubrey contributed $4,000 to her Roth IRA and later recharacterized that amount to a traditional IRA, she can fully deduct this $4,000 on her tax return. This deduction is available provided she meets the income requirements and has not exceeded the contribution limits for the traditional IRA. Since