I( had a business loss for 2022 but did have some limited gross income, can I make an IRA contribution for the gross income I received under $1,000.00

[MaryK4]

No, your contribution is limited to your taxable compensation for the year.

[maxbob]

I'm still a bit confused. Is the IRS code indicating you can contribute with earned income or taXABLE INCOME? I am an attorney & can see interpretation from both sides. Thank you again for your answers.

[dmertz]

IRA contributions must be supported by compensation. (26 USC § 408(a)(1), 26 USC § 219(b)(1)(B))

Compensation is the amount reported in box 1 of a W-2, minus any amount in box 11, or net earnings from self-employment.  Net earnings from self-employment are net profit minus the deductible portion of self-employment taxes.  With no net profit, you have no net earnings from self-employment to support an IRA contribution.

Note that if your spouse has more compensation than you and you file a joint tax return, your spouse's compensation can be used to support your IRA contribution. (26 USC § 219(c))

[DanaB27]

No, taxable compensation (earned income) not taxable income. Please see the taxable compensation for the definition.

For 2022 the total contributions you make each year to all of your traditional IRAs  and Roth IRAs can't be more than:

• $6,000 ($7,000 if you're age 50 or older), or
• If less, your taxable compensation for the year

Since you are self-employed your taxable compensation is your net profit (line 3 of Schedule 1) reduced by 

• The deduction for contributions made on your behalf to retirement plans (line 16 of Schedule 1), and
• The deduction allowed for the deductible part of your self-employment taxes (line 15 of Schedule 1).

@maxbob 

[maxbob]

Thank you for your detailed response. I wonder if anyone challenged the IRS IRA eligibility  definition in court.As an attorney I wonder if a successful challenge can be made. Re: my issue the risk/reward is the major issue.This year I don't think I can undertake said risk. I had a slight error in 2021 I received RMD's from 3 or 4 providers. I informed 1 provider during Covid I wanted the RMD to be suspended as per the options. Then in 2021 3 restored the RMD's the 4th did NOT I caught the error in 2022 early on & corrected it immediately pre April 2022 but after Dec 2021 .Took a double RMD & paid the taxes. So in 2022 I have the 2022 RMD's & 1 2021 RMD hence greater income & taxes ergo I want to lessen the taxes but don't want to increase audit possibilities. Again thanks for the imput. I appreciate all suggestions. respectfully 

[dmertz]

What's to challenge?  26 USC § 219(f) clearly defines compensation.  It refers to 26 USC § 401(c)(2) for the definition of an individual's earned income from self-employment.  The IRS is simply using the definition established by law.

[maxbob]

To D merz: I agree with the provided definition.however i see something else,it is my thought & contention that I might be able to place equal to my gross receipts income into an IRA .Others have said that it can only be AGI income,& I have a business loss.Does that change the situation? RSE

[dmertz]

Read the tax-code references I have provided.  These will lead you to the unquestionable conclusion that, as self-employed, you must have net earnings to be able to make an IRA contribution and you don't have any net earnings unless you make a profit.  What matters is the law, not what "others" say.