topic Roth IRA contributions / baby sitting income in Get your taxes done using TurboTax

Roth IRA contributions / baby sitting income

MMac — Wed, 05 Feb 2020 14:54:56 GMT

In 2018 my daughter made $1,000 babysitting. She contributed $1,000 to her Roth IRA. We reported it in Turbotax under "miscellaneous income" then "other reportable income". There was no problem. It placed the income under line 1 on 1040. This year under the same circumstances the software is stating she is not eligible for a Roth contribution and placing the income on line 7a on form 1040. Has the law changed? Is babysitting not earned income?

Re: Roth IRA contributions / baby sitting income

HelenC12 — Wed, 05 Feb 2020 15:17:06 GMT

No, the law has not changed. Babysitting is earned income. You entered her income in the wrong category. Your daughter's babysitting income should be reported as self-employment income on Schedule C not as Miscellaneous Income or other reportable income.

Other income is money you receive from something like a prize, award, lawsuit settlement, etc.

See How does my side job affect my taxes?

Re: Roth IRA contributions / baby sitting income

MMac — Wed, 05 Feb 2020 15:28:53 GMT

Actually, I figured out a workaround. Babysitting income is reportable as being a household employee. If less than $2100 per employer no W2 is required. The income is then considered earned income and makes the Roth Contribution eligible.