Summer Internship Income & Roth IRA - Need Advice!

[pgpg]

My daughter worked a summer internship with a state department and received $500. The organization didn’t issue any 1099 form because they said no form is required for payments under $600. She is filing her taxes and has reported the $500 as 'Other Income.' My question is: Can she contribute to a Roth IRA based on that $500, since it is earned income? This is the only income she has.  Or is she not eligible because she didn’t receive a tax document from the organization?

[DavidD66 · Accepted solution]

She is eligible to contribute to a Roth IRA.  If the $500 is the only income she has, she doesn't need to file a tax return.  You don't have to fie a tax return to contribute to a Roth IRA.  You just have to have earned income.  

[NCperson · Accepted solution]

@pgpg careful, because she is paying SE tax, the maximum Roth contribution is $463.

[dmertz]

This $500 of income must be entered as self-employment Other income on Schedule C and pay the self-employment taxes.  The maximum Roth IRA contribution will be $500 minus the $35 deductible portion of self-employment taxes, the result of which is $465.