401K

Jun 02, 2008 2 Replies
A

Hi,



When I contribute to 401K, will the part of the income I put into my



401K be reported as taxable income in my W2 and contribute to my adjusted gross income? I think the answer is no, am I right?

The reason I am asking this question is to determine if I can increase my 401K to help me qualify for the hope tuition credit.



Thanks, Arvind


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R

Correct. 401k contributions reduce your AGI. Be aware that your gross income before 401K deductions is still subject to social security and medicare.

Yes, that's a good strategy. You can increase your 401K contributions for other reasons as well, such as qualifying for the stimulus checks.

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