Dear TurboTax Community,
I recently retired and 2022 is the first year of doing my taxes where I don't have income to report through a W2. I have a traditional IRA account and I have started withdrawing monthly dividends to cover my living expenses until I start taking social security. I also have annual income of dividends and interest from other non-IRA accounts.
I want to make a small contribution ($2,000) to my trad IRA in 2022 to supplement the cash balance in the account. However, when doing my taxes, TurboTax does not allow me to record my IRA contribution because it says I have no income. This is not entirely correct as I have dividend and interest income.
Is there a way to make a traditional IRA contribution without having W2 income? If so, how can it be done?
Any assistance is much appreciated?
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Per IRS: To contribute to a traditional IRA, you, and/or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment. Compensation for purposes of contributing to an IRA doesn't include earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation.
You can only contribute to an IRA if you have compensation from working. This includes W-2 wages, commissions, self-employment income, taxable alimony and separate maintenance and nontaxable combat pay. It does not include passive rental income, investments, or retirement withdrawals.
Per IRS: To contribute to a traditional IRA, you, and/or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment. Compensation for purposes of contributing to an IRA doesn't include earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation.
Thank you for your reply. That answers my question. I appreciate your help.
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