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October 15, 2023
Question

Earned income for IRA contribution

  • October 15, 2023
  • 1 reply
  • 0 views

I made a contribution to my Roth IRA and I'm getting a penalty for excess contribution and an explanation that it's due to having zero earned income.  However, I have substantial gross income on my Schedule C.  I do have a net loss, but my understanding is that shouldn't matter.  Why is my Schedule C income not being included as earned income?

1 reply

DoninGA
Employee
October 15, 2023

You can contribute to a Roth IRA if you have taxable compensation and your modified adjusted gross income is within certain limitations. 

Being self-employed you must have net income to be eligible to contribute to an IRA.  If your self-employment expenses exceed your self-employed income then you do not have net income.