Hi, I'd like to contribute the maximum of $6,000 to my Roth IRA for the year 2020 before the April 15th deadline. However, I want to make sure I have enough earned income, as I'm not an expert but I know you can only contribute earned income to it. By making and uploading YouTube videos I made well over the $6,000 threshold in 2020, even after subtracting business deductions and the deduction for 1/2 of the self employment tax. I don't have any deductions for contributions to other retirement plans. Some of the income was from videos from prior years that continued to accumulate ad-revenue, however I was still actively uploading as well.
However, YouTube recently reclassified the earnings as "Royalties". I received a 1099-NEC for the income and it was listed under box 1 as "Nonemployee Compensation". Does it still count as earned income? And should I still pay self-employment taxes on it? I made YouTube videos actively in 2020 so I think they should be taxed as self-employment income and count as earned income for the Roth IRA, but I'm not 100% sure. Can I contribute the max to the Roth IRA for 2020?
Also, when calculating earned income, it is pre-tax, correct? Aside from the deduction for 1/2 of the self employment income.
Thanks!
