1099-NEC not being counted as Earned Income

Forum|Forum|5 years ago
March 10, 2021
7 replies
47 views

My only source of income was some contract work for which I got a 1099-NEC. Turbotax is not counting it as Earned Income which does not allow me to deduct my Roth IRA contribution. Is there a way around it?

SweetieJean

Alumni - Champ

Only your self-employment profit (not income) counts as Earned Income for this purpose. And the IRS requires that you claim all of your SE expenses.

mymoneysworth

Level 2

What about when there are no SE expenses? My daughter's W-2 income is $470.40 and her 1099-NEC income is $5,226.90. At the section where one enters previous years' ROTH contributions TurboTax says the limit for the 2020 ROTH contribution is $470.40, thereby ignoring the 1099-NEC income. Yet in the info section it says 1099-NEC income counts as earned income. Seems like a glitch to me. What am I misunderstanding?

VolvoGirl

Level 15

It needs to show up as self employment income on Schedule C to count as Earned Income. So You need to take the 1099NEC out of other income and enter it as self employment. You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version. Or any of the Desktop programs. But you will get the most help in the Home & Business version.

How to enter income from Self Employment
https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/26653