Election official income and roth contribution

[madwoman8]

I earned $550 in 2024 as an election official.  My earnings statement noted the amount was excluded from federal taxable wages.   I received a W2, which showed no amounts in any of the boxes.  Meanwhile, I contributed the full amount to a Roth.  When inputting that into Turbo Tax, the system shows I contributed more than I earned and noted a penalty.  How do I show that I did earn that income to offset the Roth contribution?  

[rjs · Accepted solution]

You cannot base a Roth IRA contribution on earnings that are not taxable. IRS Publication 590-A says:

"If contributions are made only to Roth IRAs, your contribution limit is generally the lesser of:
• $7,000 ($8,000 if you are age 50 or older), or
• Your taxable compensation."

Since your taxable compensation is zero, the maximum that you can contribute to a Roth IRA is zero.

[madwoman8]

Thank you, but it does not seem to be that simple.  IRS states " Compensation paid to election workers is includible as wage income for income tax purposes, and may be treated as wages for Social Security and Medicare (FICA) tax purposes."  Further, "Compensation paid for services and reimbursements paid under a non-accountable plan are taxable to election workers; however, they aren't subject to income tax withholding under Internal Revenue Code (IRC) Section 3401(a).   It would appear that election worker pay is somewhat similar to combat pay which is non taxable but still eligible for Roth contributions.  

[BillM223 · Accepted solution]

If election official income were really not subject to federal income tax, I would be rich, but, sadly, the money you make as an election official is just as taxable as most income.

I think the confusion is derived from the fact that your county (or whoever employed you) was not required to withhold federal income tax - this is not the same as saying that this income is not taxable.

Did the election authority send you a 1099-NEC or a 1099-MISC for the amount of your compensation. If a 1099-MISC (which would be the right choice, I think), then you would add this income under Wages & Income->Less Common Income-> Miscellaneous Income (this is the path under the desktop product but I believe the Online product should be similar).

Now you will have taxable income to apply to your Roth IRA. But note what rjs said - the Contribution to the Roth IRA cannot exceed your taxable income.

[madwoman8]

Thank you.  I was thinking along those lines.   I did not receive a 1099, but rather a W-2 with no amount in any of the boxes.   I have called the employer, explained the situation, and someone is supposed to get back to me.  At least I have my check stubs.

[BillM223]

May I assume that Box 1 on your W-2 had the $550? And you entered that, and TurboTax still said that the Roth IRA contribution was larger than what you earned? Or is the value in Box 1 zero or blank?

[madwoman8]

Nope, don't assume that.  All boxes were empty on received W-2.  

[BillM223 · Accepted solution]

Then I have to wonder what they were thinking...Sending you a blank W-2 is worse than useless. Sorry, you said >no amounts in any boxes" but we didn't imagine that you meant ANY boxes.

When they call, ask them if they will send you a W-2 with the $550 in box 1. If they won't, well, you can't e-file with a zero in box 1 of the W-2, so instead, just go fined Wages & Income->Less Common Income->Miscellaneous Income and work you way down to adding an miscellaneous income entry for this $550.

[madwoman8]

Thank you.  IF I get a callback, will let you know what happens.