turbotax icon
turbotax icon
turbotax icon
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

connessdg
New Member

Does ordinary business income (from Schedule K-1) qualify as earned income for purposes of IRA contribution deductability ?

"Ordinary business income" is shown in box 1 of Schedule K-1 (Form 1120S).

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
IsabellaG
Employee Tax Expert

Does ordinary business income (from Schedule K-1) qualify as earned income for purposes of IRA contribution deductability ?

No, distributions you receive as a shareholder of an S corporation do not constitute earned income for retirement plan purposes. You can only include the compensation you received from the S Corp, in the form of W-2 Wages.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

4 Replies
IsabellaG
Employee Tax Expert

Does ordinary business income (from Schedule K-1) qualify as earned income for purposes of IRA contribution deductability ?

No, distributions you receive as a shareholder of an S corporation do not constitute earned income for retirement plan purposes. You can only include the compensation you received from the S Corp, in the form of W-2 Wages.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Does ordinary business income (from Schedule K-1) qualify as earned income for purposes of IRA contribution deductability ?

Isabella I think you are confusing "distributions" with K-1's Part III Box 1 income (which is the subject matter).

TomD8
Level 15

Does ordinary business income (from Schedule K-1) qualify as earned income for purposes of IRA contribution deductability ?

A general rule of thumb is that if the income is subject to FICA / Medicare taxes, then it is considered earned income in the eyes of the IRS.

 
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
dmertz
Level 15

Does ordinary business income (from Schedule K-1) qualify as earned income for purposes of IRA contribution deductability ?

Nothing on a Schedule K-1 (Form 1120S) is compensation that will support an IRA contribution.  The only amount related to the S corp that is compensation that will support an IRA contribution is the amount in box 1 of the W-2 from the S corp.

Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies