Solved: How do I compute "earned income "as a self employed person to determine the maximum contribution I can make to a traditional IRA?
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New Member

How do I compute "earned income "as a self employed person to determine the maximum contribution I can make to a traditional IRA?

Hello, my single-member LLC's net profit in 2017 was $4,920 (Form 1040, line 12). Self employment tax was $695 (Form 1040, line 32).  I had no other earned income, and I have just one traditional IRA to which I have not yet made any contribution for 2017.  No special situations apply to me (for instance, I am not a reservist).  I am over age 50.

What is the maximum I can contribute to my traditional IRA for 2017 given these facts?  Thanks very much!

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Level 15

How do I compute "earned income "as a self employed person to determine the maximum contribution I can make to a traditional IRA?

The $695 of SE taxes appears on Form 1040 line 57, not line 32.  The deductible portion of SE taxes is then $348 on Form 1040 line 27.  The amount that you have available to contribute to a regular traditional IRA is therefore:

$4920 - 348 = $4,572

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3 Replies
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Level 15

How do I compute "earned income "as a self employed person to determine the maximum contribution I can make to a traditional IRA?

The $695 of SE taxes appears on Form 1040 line 57, not line 32.  The deductible portion of SE taxes is then $348 on Form 1040 line 27.  The amount that you have available to contribute to a regular traditional IRA is therefore:

$4920 - 348 = $4,572

View solution in original post

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New Member

How do I compute "earned income "as a self employed person to determine the maximum contribution I can make to a traditional IRA?

I think this answer is correct based on another conversation I had today.  Thanks so much for your clear, concise and helpful guidance!
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Level 7

How do I compute "earned income "as a self employed person to determine the maximum contribution I can make to a traditional IRA?

See below:

https://ttlc.intuit.com/replies/5402421

When you enter a contribution into TurboTax, the program will let you know if and how much of the contribution is deductible- you can then view the result on the refund meter.

You should make the above determination before you purchase an IRA


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