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I am retired but have a sideline sole proprietor business that had $2,500 in net income in 2016. Wanting to know if I can contribute to a traditional IRA and how much?

BTW, I have no employees.  Turbotax home & biz says I can open a traditional IRA for up to $2,304, which I assume is earnings minus deductible portion of self-employment tax, but just wanting confirmation that is allowable?


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I am retired but have a sideline sole proprietor business that had $2,500 in net income in 2016. Wanting to know if I can contribute to a traditional IRA and how much?

Net self-employed income reduced by the deductible portion of the SE tax (1040 line 57) is compensation eligible for a IRA contribution.

See IRS Pub 590A "What Is Compensation?"

https://www.irs.gov/publications/p590a/ch01.html#en_US_2016_publink1000230355



**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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4 Replies

I am retired but have a sideline sole proprietor business that had $2,500 in net income in 2016. Wanting to know if I can contribute to a traditional IRA and how much?

Net self-employed income reduced by the deductible portion of the SE tax (1040 line 57) is compensation eligible for a IRA contribution.

See IRS Pub 590A "What Is Compensation?"

https://www.irs.gov/publications/p590a/ch01.html#en_US_2016_publink1000230355



**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

I am retired but have a sideline sole proprietor business that had $2,500 in net income in 2016. Wanting to know if I can contribute to a traditional IRA and how much?

Thank you macuser_22 !

I am retired but have a sideline sole proprietor business that had $2,500 in net income in 2016. Wanting to know if I can contribute to a traditional IRA and how much?

Just to add - as long as you are not 70 1/2 or older.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

I am retired but have a sideline sole proprietor business that had $2,500 in net income in 2016. Wanting to know if I can contribute to a traditional IRA and how much?

Yes, thanks for adding that caveat macuser_22.   I'm 63, so I'm thinking the age isn't a factor...
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