1099-NEC not being counted as Earned Income for Roth IRA

[greytail]

I keep getting your Roth IRA contribution was a too-high error. I found other previous feedback on TT and I followed their comments -- cleared, and restarted process of selecting self-employed as a business. But I'm still in the same loophole...

[DanaB27]

You need taxable compensation to make Roth IRA contributions. If you are self-employed compensation is the net earnings from your trade or business (line 3 Schedule 1) reduced by the total of:

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

If the result is $0 then you cannot make Roth IRA contributions. What are the entries for lines 3, 15, and 16 on Schedule 1?

It might help to delete your self-employment, clear your cache and delete cookies, and then reenter it.

Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. To avoid the 6% tax on excess contributions, you must withdraw:

• the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
• any income earned on the excess contribution.

You will have to request the withdrawal of the excess contribution plus earnings with your financial institution.

[greytail]

Thanks for the quick response.

On Schedule 1, line 3 is $16,641, line 15 is $1,176 and line 16 is $0.

Also, my taxable income is $0.

I don't have to worry about Schedule 1 line 10 (I have a rental loss) and 1040 line 8 (Other income from Schedule 1, line 10), right? 

I will try clearing the cache and deleting cookies. Erasing and restarted several times but have been going through the same issue several times.

[DanaB27]

Yes, the rental loss on Schedule E shouldn't affect this.

If you are still getting the error after entering all your income then it would be helpful to have a TurboTax ".tax2022" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

[VolvoGirl]

Are you married?  Be sure the Schedule C  and  IRA contribution is for the same person.

[greytail]

Thank you for all the responses.

No, I'm single and I think I will have to go through the troubleshooting and try one more time.