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New Member
posted Jul 24, 2019 4:04:23 PM

Can I put 6000 into trad IRA for 2019 tax year if I earn less than 6000? Will this look suspicious? I presently have the funds in a regular savings account.

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2 Replies
Level 15
Jul 24, 2019 4:58:50 PM

You can only fund an IRA using taxable compensation, up to $6,000 for tax year 2019 if under age 50.

 

Go to this IRS website for information - https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

 

See IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs), Table 1-1 on page 6, Compensation for Purposes of an IRAhttps://www.irs.gov/pub/irs-pdf/p590a.pdf#page=6

Not applicable
Jul 24, 2019 5:55:43 PM

the max you can contribute is the lesser of $6000  or your net income from self-employment (schedule C) less 1/2 self employment tax.  any excess and earnings thereon would have to be withdrawn by 4/15/2020.

self employment tax for those making less than about $128,000 is about 14.13% (.9235 times 15.3%)of net SE income .  it can not be avoided by making an IRA contribution.  

 

in addition to self employment income ,W-2 income would increase the amount you can contribute.

 

 

don't know your tax status but perhaps you would be better off making a Roth IRA contribution instead. Same limit and you would still end up owing the SE tax, but your regular income taxes could still be $0 (your standard deduction could result in no taxable income).    you would also need to take into a/c state taxes if any