topic 1099-misc and IRA contribution in Retirement tax questions

1099-misc and IRA contribution

ekpoon1516 — Mon, 03 Jun 2019 20:20:03 GMT

If I earn only 1099-misc income, according to IRS regulation, I can still contribute to IRA. However, Turbotax does not allow me to do that. It keeps coming back to me saying my earned income is zero therefore I am not eligible to contribute to IRA. The accountant and financial advisors I consulted with all told me that 1099-misc income is considered as earned income eligible for IRA deduction. Could you help me to resolve this puzzle?

Turbotax does enter the 1099-misc income to schedule C co...

ekpoon1516 — Mon, 03 Jun 2019 20:20:04 GMT

Turbotax does enter the 1099-misc income to schedule C correctly. Line 12 of 1040 is also positive, more than $7,000. Still, Turbotax does not allow me to take IRA contribution.

You must have net compensation to contribute to an IRA. I...

ChristinaS — Mon, 03 Jun 2019 20:20:05 GMT

You must have net compensation to contribute to an IRA. If self-employed that means:

Your net income on Schedule C, after expenses
less 1/2 of the self-employment tax

If either your 1099MISC is not on Schedule C or the Schedule C is showing a small amount/ loss after expenses, you do not have compensation to contribute to an IRA

You can see your 1040 here:

My Account
Tools
View Tax Summary
Preview 1040
Is the number on line 12 a positive amount

Click- What Is Compensation?

Turbotax does enter the 1099-misc income to schedule C co...

ekpoon1516 — Mon, 03 Jun 2019 20:20:08 GMT

Turbotax does enter the 1099-misc income to schedule C correctly. Line 12 of 1040 is also positive, more than $7,000. Still, Turbotax does not allow me to take IRA contribution.

Something else is going on. What's the exact message that...

ChristinaS — Mon, 03 Jun 2019 20:20:11 GMT

Something else is going on. What's the exact message that you receive? Are you paying SE tax (see Form 1040, line 57)

Also, Traditional or Roth?.. and is it saying you can't c...

ChristinaS — Mon, 03 Jun 2019 20:20:13 GMT

Also, Traditional or Roth?.. and is it saying you can't contribute or that you have no deduction?

.... And are you in Free online or using desktop/ install...

ChristinaS — Mon, 03 Jun 2019 20:20:14 GMT

.... And are you in Free online or using desktop/ installed version?

I am using Home and Business CD. Turbox calculated SE t...

ekpoon1516 — Mon, 03 Jun 2019 20:20:18 GMT

I am using Home and Business CD. Turbox calculated SE tax for me and put on line 57 (~$1,100 out of $7,900 1099-MISC income). I have tried to make contribution to either traditional IRA or Roth, but each time, the followimg message comes back:
"Your traditional IRA contribution of $5,500 is more than your earned income of 0."
Similar message was returned when I tried to make contribution to Roth IRA.

Have you updated your program, and do you have other inco...

ChristinaS — Mon, 03 Jun 2019 20:20:20 GMT

Have you updated your program, and do you have other income on the return? Do you have an AGI of $0 or something from losses from other places? What else is on the first page of your 1040. Turbo Tax is pretty good with IRAs, so there's something peculiar in your return.

I have always updated Turbotax regularly. My adjusted gr...

ekpoon1516 — Mon, 03 Jun 2019 20:20:23 GMT

I have always updated Turbotax regularly. My adjusted gross income, after adding the other income, is $16,845 on line 37 of 1040. I do not have other business losses.

Mine is supposedly a very simple tax return. What I do not understand is why Turbotax claims I do not have any earned income.

I understand... I don't have this problem with the input...

ChristinaS — Mon, 03 Jun 2019 20:20:24 GMT

I understand... I don't have this problem with the input you describe. Contact phone support please. We can only get so far on this forum.

But you didn't, to be clear, mention what else was on the...

ChristinaS — Mon, 03 Jun 2019 20:20:26 GMT

But you didn't, to be clear, mention what else was on the first page of the 1040 per my request. Do you have anything on 23 to 36 of the 1040?

OK, I'll do that. Thank you very much for spending time...

ekpoon1516 — Mon, 03 Jun 2019 20:20:27 GMT

OK, I'll do that. Thank you very much for spending time with me.

Sorry, I must have missed your question. Lines 23-36 of...

ekpoon1516 — Mon, 03 Jun 2019 20:20:29 GMT

Sorry, I must have missed your question. Lines 23-36 of 1040 are all blanks, except line line 27 (deductible part of SE). It is only $559.

Thanks... sorry I don't have the answer. I'm stumped too,...

ChristinaS — Mon, 03 Jun 2019 20:20:30 GMT

Thanks... sorry I don't have the answer. I'm stumped too, to be honest. If something strikes me, I will certainly remember to post here. If you figure it out, I would also appreciate if you let me know. (If you don't mind:-))

I'll be more than happy to share the answer with you. Th...

ekpoon1516 — Mon, 03 Jun 2019 20:20:31 GMT

I'll be more than happy to share the answer with you. Thanks again.

you're welcome

ChristinaS — Mon, 03 Jun 2019 20:20:32 GMT

you're welcome