Roth IRA contribution

[MelO4]

I have two Schedule Cs this year.  One for a +$7000 profit and one for a -$3000 loss.  TT is saying it's ok if I make a Roth Contribution of $6000 without penalty.  Shouldn't I only be able to make a $4000 contribution (7000-3000=$4000 net)?  

Thank you!!!

[PaulaM]

Do you have other earned income? Or do you have a spouse with earned income?

[MelO4]

No other income.

[PaulaM]

Your contribution limits should be limited your net profits less any deductible portion of self-employment taxes. I'm not certain why you are seeing something other than that. Did you enter your Roth IRA contribution amount before entering all your Schedule C data for both businesses?

Try closing your program if using the desktop version and then open up again and let any updates run. Then revisit the section. 

Or you might try entering your contribution amounts under the traditional IRA section just as an experiment to see if your contributions are limited to your net earnings for both businesses. Then remove those entries. 

[dmertz]

TurboTax does base the permissible contribution on the net.  Examine the Roth IRA Contribution Limit Worksheet and Form 5329 to see if they show an excess contribution and a penalty.

[MelO4]

There is no Form 5329 because I'm not incurring a penalty.  I told TT a high Roth IRA contribution, one that I knew would draw a penalty and then Form 5329 was there, with the penalty.  I didn't save it and re-opened the program and (went back to the old input) and the Form 5329 was gone.

[MelO4]

I did pay $2000 dollars in Self-Employment Tax and received a deduction of $1000.

So I must get the $4000 net income from the two Schedule Cs + $2000 Self-Employment Tax to equal =$6000 earned income.  Thus a $6000 Roth contribution.  I don't think that's correct but I can't see the calculation TT is making because there is no Form 5329.