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posted May 31, 2019 5:35:05 PM

How much I can contribute to Roth IRA with 1099 earned income with $5000 gross but $3000 net?

How much I can contribute to Roth IRA with 1099 earned income with $5000 gross but  $3000 net?

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1 Best answer
Level 15
May 31, 2019 5:35:05 PM

With eligible compensation only from self employment, the amount that you can contribute to an IRA is your net profit from self-employment (Schedule C line 31) minus the deductible portion of your self-employment taxes.  With exactly $3,000 of net profit, your maximum permissible Roth IRA contribution would be $2,788.

Keep in mind, though that if your modified AGI exceeds certain limits, the amount that you may contribute to a Roth IRA may be limited.  See, How Much Can Be Contributed?:
https://www.irs.gov/publications/p590a/ch02.html#en_US_2015_publink1000230988

2 Replies
Level 15
May 31, 2019 5:35:05 PM

With eligible compensation only from self employment, the amount that you can contribute to an IRA is your net profit from self-employment (Schedule C line 31) minus the deductible portion of your self-employment taxes.  With exactly $3,000 of net profit, your maximum permissible Roth IRA contribution would be $2,788.

Keep in mind, though that if your modified AGI exceeds certain limits, the amount that you may contribute to a Roth IRA may be limited.  See, How Much Can Be Contributed?:
https://www.irs.gov/publications/p590a/ch02.html#en_US_2015_publink1000230988

Level 7
May 31, 2019 5:35:09 PM

For an IRA contribution, you can contribute up to your net income.

You may be able to increase your refund (or decrease taxes owed) by purchasing a Traditional IRA, and you have until April 18, 2016 to do so.

Although the Roth IRA is not tax deductible as is the Traditional IRA, both may qualify you for the Saver's Credit, which may also increase your refund.

If you are using TurboTax Desktop or TurboTax Online Home & Business

  1. Click on Federal Taxes (Personal if using Home & Business)
  2. Click on Deductions & Credits
  3. Select I'll choose what I work on
  4. Scroll down to Retirement and Investments
  5. Click on Start/Update next to Traditional and Roth IRA Contributions