I turn 73 in 2024. I just took my RMD early in 2024. My wife and I are retired and our only income comes from a pension, social security, our stocks & banks accounts, and a small rental LLC (one condo that we rent). I do not believe any of this is earned income. Yet when I work through my 2023 taxes with TurboTax, I get to the “Federal Review’ section and indicate the neither my wife nor I are covered by a retirement plan at work (since we are retired). And Turbotax tells me that I can still reduce my taxes by contributing money (which in our case would be from my RMD) into our IRA.
The first question - is the LLC generating ‘earned income’ because I know the other income does not fall into the IRS’ definition of ‘earned income’? Can rental property generate earned income?
The second question - is it against the IRS’ rules to make an IRA (or HSA) contribution from my RMD since that is exactly what I would be doing? But the IRA contribution would be lower my taxes for 2023? I know they just view the RMD as taxable income but it just seems like the IRS would find something wrong with this.
Thanks
