You need to take out the entire amount contributed plus earnings, unless your spouse worked. First, see below for any of these possible options.
What Is Compensation?
Generally, compensation is what you
earn from working. For a summary of what compensation does and does not
include, see Table 1-1. Compensation includes all of the items discussed next
(even if you have more than one type).
Wages, salaries, etc. Wages,
salaries, tips, professional fees, bonuses, and other amounts you receive for
providing personal services are compensation. The IRS treats as compensation
any amount properly shown in box 1 (Wages, tips, other compensation) of Form
W-2, Wage and Tax Statement, provided that amount is reduced by any amount
properly shown in box 11 (Nonqualified plans). Scholarship and fellowship
payments are compensation for IRA purposes only if shown in box 1 of Form W-2.
Commissions. An amount you
receive that is a percentage of profits or sales price is compensation.
Self-employment income. If you
are self-employed (a sole proprietor or a partner), compensation is the net
earnings from your trade or business (provided your personal services are a
material income-producing factor) reduced by the total of:
- The deduction for contributions made on your behalf to
retirement plans, and
- The deduction allowed for the deductible part of your
self-employment taxes.
Compensation
includes earnings from self-employment even if they are not subject to
self-employment tax because of your religious beliefs.
Self-employment loss. If
you have a net loss from self-employment, do not subtract the loss from your
salaries or wages when figuring your total compensation.
Alimony and separate maintenance. For
IRA purposes, compensation includes any taxable alimony and separate
maintenance payments you receive under a decree of divorce or separate
maintenance.
Nontaxable combat pay. If you
were a member of the U.S. Armed Forces, compensation includes any nontaxable
combat pay you received. This amount should be reported in box 12 of your 2017
Form W-2 with code Q.
Compensation does not include any
of the following items.
- Earnings and profits from property, such as rental income,
interest income, and dividend income.
- Pension or annuity income.
- Deferred compensation received (compensation payments
postponed from a past year).
- Income from a partnership for which you do not provide
services that are a material income-producing factor.
- Conservation Reserve Program (CRP) payments reported on
Schedule SE (Form 1040), line 1b.
- Any amounts (other than combat pay) you exclude from
income, such as foreign earned income and housing costs
