IRA contribution limitation

Wdumanski1 · ‎April 27, 2021

My granddaughter earned $3900 on a W2 but $16000 as unemployment money. The program says she can only contribute $3900 to her IRA. Does the unemployment money not count as income?

xmasbaby0 · ‎April 27, 2021

No because it is not "earned" income.

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DavidD66 · ‎April 27, 2021

No, the unemployment benefits are not eligible for an IRA contribution. Only "earned income" can be contributed to an IRA. She can't use it to contribute to an IRA, but she didn't have to pay employment taxes (social security and Medicare) on it either, because it wasn't earned income.

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Wdumanski1 · ‎April 27, 2021

Thanks

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IRA contribution limitation