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M
michael-ratway
January 31, 2021
Question

What are allowable income sources for an IRA Contribution?

  • January 31, 2021
  • 2 replies
  • 0 views
Is interest from saving bonds or certificate of Deposit (CD) earned income?

2 replies

DaveF1006
DaveF1006
January 31, 2021

No.  Savings Bonds and Certificate of Deposits are considered unearned income. Please view this IRS link for further details.

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D
dmertz
Employee
January 31, 2021

IRA contributions can only come from "compensation," generally income reported in box 1 of a W-2 (minus any amount in box 11) or net earnings from self employment (although there are a few other special-case sources of compensation).  Interest from any source is not compensation and does not support an IRA contribution.  For more details, see What is Compensation in IRS Pub 590-A:

https://www.irs.gov/publications/p590a#en_US_2019_publink1000230355

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