@Sartori162 wrote:
Has a tax expert weighed in on this question yet -- For a retiree with no other 'earned' income, does the gain from an NQSO same-day sale exercise meet IRS requirements for ‘earned income’ to enable a deductible contribution to a traditional IRA?
• During the entire tax year, I was a retiree receiving a pension, but otherwise “not covered by an employer retirement plan".
• During the tax year, I exercised an NQSO via a same-day sale. The gain was subject to withholding for federal income tax, Social Security tax, and Medicare tax. I received a W-2 from my previous employer that showed the gain in Box 1. Box 11 was blank. Box 12 showed the same amount as box 1 with the code V.
No expert necessary. The IRS clearly says in pub 590A that compensation for IRA contributions is W-2 box 1 minus box 11. (Box 12 is irrelevant).
https://www.irs.gov/publications/p590a#en_US_2020_publink1000230357
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
