What are allowable income sources for an IRA Contribution?

Forum|Forum|5 years ago
January 31, 2021
2 replies
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Is interest from saving bonds or certificate of Deposit (CD) earned income?

TurboTax Online

DaveF1006

Level 15

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

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dmertz

Level 15

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