1099-NEC

[bobaloisi]

I earned $12k in 2020 and it was reported in a 1099-NEC.  When I enter my Roth IRA contribution of $1500, it classifies it as an excess contribution and says my earned income is zero.

[bobaloisi]

CORRECTION: when I enter my wife's contribution of $1500

[JohnB5677]

Your spouse can contribute to any IRA based on your income alone.  However, it cannot exceed your joint taxable income.   

You stated that you received $12K on a 1099-NEC. That's countable as income, but your deductions may have reduced your income to the point where your wife was no longer eligible.

The IRS says: If you file a joint return and have taxable compensation, you and your spouse can both contribute to your individual IRAs provided.  

• Your total contributions to both your IRA and your spouse’s IRA may not exceed your joint taxable income
• or the annual contribution limit on IRAs times two, whichever is less.
• It doesn't matter which spouse earned the income.  

Roth IRAs and IRA deductions have other income limits.

See IRA Contribution Limits and IRA deduction limits.

[bobaloisi]

Our joint taxable income is $102K (line 15, 1040) 

see image below

Could this be why?  If Yes, where do I look to find out why it believes my 2020 Earned Income is zero?

 

[DianeW777]

it depends on where you entered the income from the Form 1099-NEC.  This is considered payment for services or nonemployee compensation (NEC) which should be reported on Schedule C.

If you did report it there, then as stated by @JohnB85677 your expense deductions may have offset the income to zero since the worksheet shows no earned income for 2020. 

• Sign into your TurboTax account > Search in the upper right > Type Schedule C > Press Enter > Click on the Jump to link to review your entries.

The earned income on the worksheet that is listed is from your 2019 return per the line description.  If you do not have any W-2 forms, then the only earned income on the return would come from the Schedule C.

For a definition of earned income on the tax return use this link: What is earned income?

Example of using search image below.

[bobaloisi]

I use the desktop version and entered it here:

When I bring up the list of forms, there is no Schedule C

[AmyC]

On the desktop version, top towards the right, is Show Topic List. Click on Show Topic List. You will see everything available. Locate Business, click the little arrow to the left, locate Business Income and Expenses, click on the words Business Income and Expenses and the program takes you there.

[bobaloisi]

I called the support line and got the solution.  You have to post a business expense against the 1099-NEC in order for a schedule C to be created.