My wife has over $7000 in W2 comp. (box 1) which is "nonqualified" (box 11). Can that income qualify as earned income for purposes of making a Roth contribution?

Expert Alumni

Mar 20, 2020 1:58:02 PM

No, @macuser_22 is correct. [Edited 03/20/20 | 2:32 pm PST]

Level 15

Mar 20, 2020 2:01:03 PM

No. Taxable W-2 compensation is W-2 box 1 minus any amount in box 11.

See IR Pub 590A.

https://www.irs.gov/publications/p590a#en_US_2019_publink1000230355

What Is Compensation?

Generally, compensation is what you earn from working. For a summary of what compensation does and doesn’t 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.

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My wife has over $7000 in W2 comp. (box 1) which is "nonqualified" (box 11). Can that income qualify as earned income for purposes of making a Roth contribution?

What Is Compensation?