1099 NEC income count as earned income for purposes of ira contribution limits?

[Leifland5]

I have 8,000 from an internship which requires me to be a student.  Per the rules, since being enrolled in a 4 yr college is required to participate in this internship and be paid, tuition is qualified business expense for this 1099 NEC activity.  My tuition is 10,000 and therefore my net earned income is -2k.  My question is, does the 8k earned income still get added to my total earned income which is then used to determine the amount of money I am allowed to put in a ROTH IRA for 2020? Right now, it does not appear that turbo tax is adding the 8k to my earned income and so I am only allowed to add a small amount to a ROTH IRA based on a little W2 income I had.  I see other glitches in the software for 1099 NECs and think this may be another one? Thanks for any ideas.

[KrisD15]

I am not sure how you entered the 1099-NEC, but a 1099-NEC is for Non-Employee Compensation and needs to be connected to a Schedule C as Self-employed income. In this case, yes it is income for IRA purposes. 

A 1099-NEC is not to be used for reporting a scholarship or employer education reimbursements.  

The IRS brought back the 1099-NEC for just this purpose, so it would generate a Schedule C. Any other type of payments are reported on 1099-MISC or other appropriate tax document. 

[Leifland5]

Thanks, I did a little more research and found out that earned income for defining ira contribution limits is based on NET (so earned income from all sources minus expenses).  So I think that answers it in that it is the NET, not the gross listed on the 1099 NEC.   Thanks for reviewing and answering my question.

[jbpattor]

My wife has 1099-NEC income, which has correctly created a Schedule C in the TurboTax Self Employed desktop program.  We both have made the maximum Roth IRA contributions (for over 50), but the program is not carrying over the Schedule C net profit (line 31) to the Roth IRA Contribution Limit Worksheet (lines 5 or 7), so TurboTax is telling us that we are not eligible for Roth IRA contributions.  However, IRS Pub 590 clearly states that self-employment income is included in compensation.  In addition, the "Kay Bailey Hutchison Spousal IRA limit" states that both of our contributions would be fully eligible, as long as the combined income is over the contribution limits.  In addition, she is not subject to the self-employment tax as a notary.

I believe this is an error in the TurboTax program that apparently carries over from last year's version from comments I've seen, including this one I'm replying to.    I had posted this a few weeks ago on another Turbotax message board, but have yet to receive any confirmation that it has been corrected.