topic IRA contributions in Get your taxes done using TurboTax

IRA contributions

HWKP — Wed, 23 Mar 2022 13:30:37 GMT

I am preparing my son's taxes. His only income is 1099-NEC. When I include an IRA contribution, the system in increasing his Federal Taxes due.

Re: IRA contributions

ColeenD3 — Wed, 23 Mar 2022 13:57:38 GMT

He can only make a contribution for the amount of money he made on his business. The maximum contribution is $6,000 in 2021.

Being self-employed, he has to also deduct one-half of self-employment tax from the amount he can contribute. For a $6,000 contribution on $6,000 of income, that amount is $$5576. If he contributed more, he over contributed.

Also, make sure he entered his 1099-NEC in the right place.

Re: IRA contributions

HWKP — Wed, 23 Mar 2022 14:11:25 GMT

He did some filing work for my employer, and was given a 1099-NEC rather than a 1099-MISC. He made over $4000 and was contributing $2000 to an IRA. We indicated he was not an employee, but did this work as occasional activity (which is true).

Re: IRA contributions

MinhT1 — Wed, 23 Mar 2022 14:24:40 GMT

Your son is considered as self-employed and his income is earned income and qualifies him for an IRA contribution.

When you enter his Traditional IRA contribution, his Federal tax due should decrease.

In TurboTax, you can enter IRA contributions by following these steps:

In TurboTax, open your tax return
Click on Federal in the left-hand column, then on Deductions & Credits on top of the screen
Scroll down to All Tax breaks, locate the section Retirement and Investments and click on Show more
Click Start next to Traditional and Roth IRA Contributions.

Re: IRA contributions

HWKP — Wed, 23 Mar 2022 14:32:11 GMT

Yes, those are the steps I took to enter his IRA contribution. However, the Fed Tax Due increased as soon as I put in the amount. There may be a glitch. I will file his taxes on paper this year, I guess.

Thank you.