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davidbelc
New Member

Should ROTH IRA Computation Limit Worksheet block 7 wages and other income be the same as Schedule C Block 31?

I have earned income of: $6,941 (on Schedule C)

The ROTH IRA Computation Limit Worksheet shows my Earned Income as: $4,450 (Block 7)

For a difference of: $491.

When entering my 2016 Roth IRA Contributions ($2256 for me and $4,686 for my wife) Turbo Tax reports an overpayment because it is working on the ROTH IRA Computation Limit Worksheet instead of the $6,941 from Schedule C.

Why isn't the $6,450  from IRA Worksheet using the same $6,941 as Schedule C?

1 Best answer

Accepted Solutions
ChristinaS
New Member

Should ROTH IRA Computation Limit Worksheet block 7 wages and other income be the same as Schedule C Block 31?

Your earned income for Roth contribution purposes also takes into account 1/2 of your self-employment tax.

Net income from Schedule C= $6941

Less 1/2 of SE tax=                  (490)   =     {($6941 *.9235) *.153}/2

The result in Turbo Tax seems correct.

Self-employment income.   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of:

  • The deduction for contributions made on your behalf to retirement plans, and

  • The deduction allowed for the deductible part of your self-employment taxes.

View solution in original post

3 Replies
ChristinaS
New Member

Should ROTH IRA Computation Limit Worksheet block 7 wages and other income be the same as Schedule C Block 31?

Your earned income for Roth contribution purposes also takes into account 1/2 of your self-employment tax.

Net income from Schedule C= $6941

Less 1/2 of SE tax=                  (490)   =     {($6941 *.9235) *.153}/2

The result in Turbo Tax seems correct.

Self-employment income.   If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of:

  • The deduction for contributions made on your behalf to retirement plans, and

  • The deduction allowed for the deductible part of your self-employment taxes.

davidbelc
New Member

Should ROTH IRA Computation Limit Worksheet block 7 wages and other income be the same as Schedule C Block 31?

Thanks for the rapid response....
ChristinaS
New Member

Should ROTH IRA Computation Limit Worksheet block 7 wages and other income be the same as Schedule C Block 31?

You're welcome!
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