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March 6, 2023
Question

why would turbo tax allow me to make an ira contribution when I did nit have earned income

  • March 6, 2023
  • 2 replies
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    2 replies

    DoninGA
    Employee
    March 6, 2023

    You can enter the contribution but if you follow the interview screen the program will tell you that the contribution is not permitted if you do not have earned income and the amount contributed will be considered excess contribution.  You will have a penalty if you do not remove the excess contribution.

     

    Screenshot -

     

    March 6, 2023

    Yes, you need taxable compensation (earned income) to make IRA contributions. You might need to check your income entries. Did you have fellowship and stipend payments? They are treated as taxable compensation for IRA purposes.

     

    Roth IRA contribution may be limited based on your filing status and income. Please see Amount of Roth IRA Contributions You Can Make for 2022 for details. Please see What happens if I made an excess Roth IRA contribution for additional information.

     

    If you contributed to a traditional IRA and greeting the message it can't be deducted then you can still make the contribution. But the deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. Please see IRA deduction limits for details.

     

    If this doesn't answer your question then please provide details on what kind of income you had and if this was a Roth or traditional IRA contribution.

     

    [Edited 3/6/2023 | 7:00 am PST]

    @ddemaison

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