I had a total of 6,000 inW2 Earned Income in 2019.I also had a loss of -5,000 in 1099 Income in 2019.I contributed 6,000 to my 2019 Roth IRA.Do I have a 5,000 excess contribution in 2019? In other words, is my Earned Income based on just my W2 income or both W2 and 1099 combined Net Income?

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IRStress

Level 2

Solved

Earned Income for Roth IRA

Forum|Forum|4 years ago
March 18, 2022
1 reply
0 views

I had a total of 6,000 inW2 Earned Income in 2019.
I also had a loss of -5,000 in 1099 Income in 2019.
I contributed 6,000 to my 2019 Roth IRA.

Do I have a 5,000 excess contribution in 2019?

In other words, is my Earned Income based on just my W2 income or both W2 and 1099 combined Net Income?

Not A Product Question

Best answer by VolvoGirl

See IRS pub 590A Contributions page 6

https://www.irs.gov/pub/irs-pdf/p590a.pdf

Self-employment loss. If you have a net loss from self-employment, don’t subtract the loss from your salar- ies or wages when figuring your total compensation.

DaveF1006

Level 15

Since your IRA contribution limits is based on your Modified Adjusted Gross Income(MAGI), your contribution limit in 2019 would normally be $1000, which is your AGI and MAGI for the year.

You do have an excess contribution of $5000 in 2019 as your W2 and 1099 capital loss are a combined AGI/MAGI total for the year.

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IRStressAuthor

Level 2

@DaveF1006 Thank you. But now I have 2 opposing answers to the same question here. This is exactly what brought me to ask this question in the first place. There is no clear answer I can find anywhere. Not sure what to do. 😞

VolvoGirlAnswer

Level 15

See IRS pub 590A Contributions page 6

https://www.irs.gov/pub/irs-pdf/p590a.pdf

Self-employment loss. If you have a net loss from self-employment, don’t subtract the loss from your salar- ies or wages when figuring your total compensation.