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.
@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.
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.
@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.