Hello,
I am the recipient of a full scholarship stipend, that goes towards both living and school expenses. As such, a large portion of the scholarship money is taxable income (about $13000 worth). My actual earned W-2 income was only around $1000 last year. I paid taxes on all of that income for 2019.
This year, I opened a Roth IRA account. I know the annual contribution limit is $6000 so I made a $6000 contribution for tax year 2019. However, now I think I may have made a mistake.
This website: https://www.investopedia.com/roth-ira-contributions-with-no-job-4770755 says that it is allowable for me to use the scholarship money in this way but other websites say I can only contribute the maximum of my earned W-2 income (so $1000) per year. I had not read about the earned income rule until after I opened up the Roth IRA account and made the contribution - I looked through several websites for information but this rule was well-hidden and I didn't realize until it was too late.
I am not sure if I made a mistake in characterizing the money for 2019. If I did, I will withdraw the excess contribution. Do you think I will need to do so? And if so, what are the penalties I will face? I already paid income taxes for 2019, but I know there's still time up until July 15th to fix things - will I owe an extra amount on my taxes for 2019?
Thanks so much in advance.
