What are allowable income sources for an IRA Contribution?

michael-ratway · ‎January 31, 2021

Is interest from saving bonds or certificate of Deposit (CD) earned income?

DaveF1006 · ‎January 31, 2021

No. Savings Bonds and Certificate of Deposits are considered unearned income. Please view this IRS link for further details.

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dmertz · ‎January 31, 2021

IRA contributions can only come from "compensation," generally income reported in box 1 of a W-2 (minus any amount in box 11) or net earnings from self employment (although there are a few other special-case sources of compensation). Interest from any source is not compensation and does not support an IRA contribution. For more details, see What is Compensation in IRS Pub 590-A:

https://www.irs.gov/publications/p590a#en_US_2019_publink1000230355