Son (dependent) earned $800 as a referee. If he has $200 expense (uniform/travel) can he contribute $800 to Roth IRA or is he limited to $600?

[NCperson]

@tswengros - first question - was he a W-2 employee or 1099 self-employed.  if W-2, that $200 can't be deducted. 

Also, be aware there will be 15.3% self-employment tax if he was a 1099 self employed individual - that is really the social security and medicare taxes that w-2 employees and their employers pay.  it is NOT "income tax". 

But otherwise, he can contribute up to what he earned.

[dmertz · Accepted solution]

If he receives a W-2, the amount he can contribute to a Roth IRA is the amount shown in box 1 of the W-2.

If he is an independent contractor and not an employee who receives a W-2, he is self-employed and must file Schedules C and SE.  On Schedule C he'll deduct his business expenses.  If Schedule C shows $600 profit, his maximum Roth IRA contribution will be $600 minus one-half of his self-employment tax.  That would be a maximum contribution of $557.

[Opus 17]

---

@dmertz wrote:

If he receives a W-2, the amount he can contribute to a Roth IRA is the amount shown in box 1 of the W-2.

If he is an independent contractor and not an employee who receives a W-2, he is self-employed and must file Schedules C and SE.  On Schedule C he'll deduct his business expenses.  If Schedule C shows $600 profit, his maximum Roth IRA contribution will be $600 minus one-half of his self-employment tax.  That would be a maximum contribution of $557.

---

Because the Roth contribution limit for a self-employed person isn't known finally until completing the person's tax return, you may want to wait until after you prepare the return to make the contribution.  He can contribute to a Roth for the 2022 tax year until April 15, 2023.  He just has to make sure to let the plan custodian know that it is a contribution for the prior year.