You need taxable compensation to make Roth IRA contributions. If you are self-employed compensation is the net earnings from your trade or business (line 3 Schedule 1) reduced by the total of:
- The deduction for contributions made on your behalf to retirement plans (line 16 Schedule 1), and
- The deduction allowed for the deductible part of your self-employment taxes (line 15 Schedule 1).
If the result is $0 then you cannot make Roth IRA contributions. What are the entries for lines 3, 15, and 16 on Schedule 1?
It might help to delete your self-employment, clear your cache and delete cookies, and then reenter it.
Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. To avoid the 6% tax on excess contributions, you must withdraw:
- the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
- any income earned on the excess contribution.
You will have to request the withdrawal of the excess contribution plus earnings with your financial institution.
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