Good Morning
I received a check with a little over $800.00 from a class action lawsuit, my intention is to deposit it into my traditional IRA - my question is would I have any issue with the IRS since I'm trying to avoid any additional tax payment for this his year.
I do not have any issue with max amount in deposit since I have not deposit anything this year to my IRA.
I assume that the payment has nothing to do with restoring value to investments in your IRA that were mishandled that would result in the deposit being a restorative payment to the IRA and that the payment was not a recovery of wages that had not been paid.
The $800 from the settlement is simply cash. To be eligible to contribute to an IRA you must have compensation from working and the contribution must be made in cash.
There’s no problem with you using that payment as a contribution to your IRA.
The $800 is taxable unless the settlement was for physical harm, discrimination of any kind, loss of income, or devaluation of an investment.
I assume that the payment has nothing to do with restoring value to investments in your IRA that were mishandled that would result in the deposit being a restorative payment to the IRA and that the payment was not a recovery of wages that had not been paid.
The $800 from the settlement is simply cash. To be eligible to contribute to an IRA you must have compensation from working and the contribution must be made in cash.