1. Why does my overall tax liability increase for a Roth IRA contribution with after tax earned income money from employment? Is this added to the MAGA?
2. I made what I thought was the maximum contribution of $7,500 for 2024, as I did for 2023--the year I retired. TT is flagging my 2024 Roth IRA contribution limit based upon only my 2024 W2 income--less than $2K after tax from back pay owed and telling me it exceeded the contribution limit. Note that $1K came from that and the rest of the contribution from a taxable high yield savings account that was funded entirely with money from taxable employment earned income over the years. I am roughly tracking the interest on that account and estimate that I can still contribute the maximum from it for another two years without using the interest from it.
Is there a way to correct this in TT to reflect this is actually from employment? Why is TT only focused upon the tax year on hand for W2 income or self-employment with no way to adjust it for after tax employment income saved in prior years?
You'll need to sign in or create an account to connect with an expert.
Income in prior years is not relevant.
You can contribute only up to the amount of your 2024 compensation, or the max, whichever is less.
"Or" the max.? Did you mean to say "and that is limited to the max" instead. As written, it can also be interpreted as meaning you can still contribute the maximum amount from previous years of earned income as long as you do not include the interest gained from it.
If you don't have any taxable compensation earned and paid in 2024, you cannot make a Roth IRA contribution for that year.
In any year you may contribute the lesser of 100% of taxable compensation or the annual limit .
Since it appears you retired in 2023 do not have any 2024 wages or other earnings from work, you are ineligible to make a Roth contribution, though you remain eligible to convert Traditional IRA funds to a Roth.
You will need to reach out to your Roth custodian and ask them to process a "Return of Excess Contribution" for you.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
vijay-saikrishna
Returning Member
mbarjune
New Member
chrisjohnjarvis
New Member
Anonymous RK
New Member
cherrice1
New Member