TT is saying Roth contribution is too high and that my income is zero. I have a 1099-NEC.

[sharkteeth]

TT is saying Roth's contribution is too high and that my income is zero. I have a 1099-NEC. I keep entering and re-entering the form and it still says zero. Is this coded wrong?

[ErnieS0]

You may have entered your 1099-NEC wrong.

You can only make a Roth contribution if you have earned income. In most cases, a 1099-NEC is considered self-employment (earned income). 

There is a way to enter a Form 1099-NEC into TurboTax as "other income" meaning it is not earned income (money earned for performing a service for profit). If you enter your 1099-NEC that way, it will not count for a Roth contribution.

Check your 1099-NEC

1. Type 1099-nec in Search in the top right
2. Select Jump to 1099-nec
3. Select Edit on the 1099-NEC Summary
4. None of these apply to me should be selected on Does one of these uncommon situations apply?
5. You should see a business on Self-employed 1099-NEC income

To verify this, tap Income & Expenses at the top. On Your income and expenses you should see Self-employment income and expenses (includes 1099 info)

[SweetieJean]

Be sure you also enter all your self-employment expenses.

[VolvoGirl]

Do you have a Net Profit on Schedule C?  You need a profit to count as earned income.

For an IRA contribution.  If you only have self-employment income you can only contribute up to your net profit reduced by the deduction allowed for one-half of your self-employment taxes.  See IRS publication 590 http://www.irs.gov/pub/irs-pdf/p590a.pdf

So check 1040 Schedule 1 line 15.  You have to deduct that amount from your Schedule C Net Profit.  That will give you the allowed contribution for the 1099NEC income.

[amoreno878]

I have no business and all I did for Door Dash was deliver food.  I have never had a 1099 -NEC before. So I have no business account, expenses, or workers nothing. So how do I just apply it to the taxes? Without all this other Schedules and forms? HELP

[VolvoGirl]

Sorry that is self employment income.  

A 1099NEC is for self employment income.  Yes you are the owner of your own self employment business.  You are in business for yourself.  Use your own info.  The people or company that pays you is your customer or client.  You need to fill out schedule C for self employment business income.  You are considered to have your own business for it.  YOU are the business.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.  Here's a Schedule C  https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version or use any of the Desktop CD/Download programs.

How to enter self employment income

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

You will need to keep good records.  You may get a 1099NEC at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small and if you don't get the 1099NEC.

You use your own records.  You are considered self employed and have to fill out a schedule C for business income.   You use your own name, address and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all income is At Risk.   

After it asks if you received any 1099Misc or 1099NEC it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records.  Just go through the interview and answer the questions.   Then you will enter your expenses.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  

The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 23.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

[sharkteeth]

Thanks for your reply @ErnieS0

I ended up resetting the form and I can connect the two correctly.

[ThomasM125]

I'm not sure what schedule you are looking at there, but you can look on your schedule 1, line 3 to see if you have any net income from self-employment, and let us know what you see there. If not, then that would explain why you can't do an IRA contribution, since you have no earned income.

You can view your form 1040 while working in the online version of TurboTax by following these steps:

While working on your return in the Federal section of TurboTax:

   1.  Choose the Tax Tools icon on your left menu bar

   2.  Tools

   3.  View Tax Summary

   4.  Choose the Preview my 1040 on your left menu bar

@sharkteeth

[sharkteeth]

Thank you for your reply @ThomasM125 I ended up resetting the form and I can connect the two correctly.

[DianeW777]

This is good to know.  You are allowed the following contribution to your Roth IRA.

For 2022, 2021, 2020 and 2019, the total contributions you make each year to all of your traditional IRAs  and Roth IRAs can't be more than:

• $6,000 ($7,000 if you're age 50 or older), or
• If less, your taxable compensation for the year

For 2018, 2017, 2016 and 2015, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

• $5,500 ($6,500 if you're age 50 or older), or
• If less, your taxable compensation for the year

The IRA contribution limit does not apply to:

• Rollover contributions
• Qualified reservist repayments