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Rick5010
Returning Member

Jury Duty, earned income, and Roth Contribution

I am using TT Premier 2019, and have entered my jury duty pay (a whooping $105) for 2019 into the "Jury Duty" section of income.  I shows up on line 12 and on line 24 in the "Other Income Statement".  It also shows up on line 7a on the 1040 Form.

I am retired, and this is the only "earned income" I have for 2019, so I made a $105 contribution to my Roth IRA for 2019.  TT tells me, during review, that I have "over contributed" to my Roth IRA by $105, and I will owe a penalty.  Obviously TT is not recognizing the Jury Duty pay as "earned income".  Have others seen this, and will there be a correction so TT Premier 2019 will recognize this as income and eligible for Roth contribution?

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6 Replies

Jury Duty, earned income, and Roth Contribution

I don't think that is earned income.  You don't pay Social Security and Medicare on it.  Sorry.

Rick5010
Returning Member

Jury Duty, earned income, and Roth Contribution

VolvoGirl....Thanks for your response.

 

I wrote a response yesterday, but it is not posted...must have been lost.

 

There is clearly disagreement over this.  Another TT thread (https://ttlc.intuit.com/community/taxes/discussion/is-jury-duty-pay-earned-income/00/540275)

indicated it is earned income and eligible for Roth IRA contribution.  Another reference to H&R Block also indicates it is earned income (https://www.hrblock.com/tax-center/income/other-income/is-jury-duty-pay-taxable/).

Another post from ED Slott (IRA Specialists) shows its answer to this question in a table form (https://www.irahelp.com/slottreport/you-must-have-earned-income-contribute-ira)

So I would really like to hear from the TT experts/legal on this, and consider correcting the Premier program problem.  

rjs
Level 15
Level 15

Jury Duty, earned income, and Roth Contribution

@Rick5010 

The term that the IRS, and the tax law, use for income to support an IRA contribution is "compensation," not earned income.


You are right that there is disagreement about this. Some experts say that jury duty pay can be treated as compensation that can be used as a basis for an IRA contribution (traditional or Roth), and some experts say it is not compensation. You can get expert opinions either way. The IRS has apparently never issued any guidance on the question.


TurboTax takes the safe, conservative position that jury duty pay is not compensation for the purpose of making an IRA contribution. That's not an error or a problem. It's a decision by the tax experts at TurboTax. I checked a professional tax software product that I use, from a different company, and it handles it the same way that TurboTax does. TurboTax is not going to "correct" it because there is nothing wrong.


You could report the $105 as wages instead of as jury duty pay, but you have no W-2 or any other documentation to justify reporting it as wages. If the IRS questions the Roth IRA contribution, it could end up being treated as an excess contribution, which would subject you to penalties. If you want to go to battle with the IRS over $105, you can do that. But I don't think it's worth the trouble and aggravation. If you pursue it to the point of becoming a test case, you would incur legal fees far in excess of $105.


My advice is to contact the custodian of your Roth IRA and tell them to return the money to you as a mistaken contribution or excess contribution. They have to return any earnings on the money, as well as the original amount of the contribution. You should get this done before the end of the year.

Rick5010
Returning Member

Jury Duty, earned income, and Roth Contribution

Thanks rjs,

 

Yours is a thoughtful and insightful response.  Yes, the amount is trivial, and no, I am not in any way interested in being a "test case".  I hoped to gain insight with this discussion....and I have.  The group I work with regarding financial management has indicated I should claim it as compensation and do the ROTH contribution.  I will contact them and ask for clarification or guidance....again.

 

Thanks again!

 

 

Jury Duty, earned income, and Roth Contribution

The IRS Pub 590A defines "compensation" for IRA purposes as: "Generally, compensation is what you earn from working."

 

https://www.irs.gov/publications/p590a#en_US_2018_publink1000230355

 

Generally, any money earned from working is subject to FICA (Medicare & SS) tax- jury duty is not.  

Generally compensation from working can be used for the Earned Income Credit - Jury duty pay cannot.  Generally, work for compensation is something you do for the specific purpose if earning money - jury duty pay is not something that you can choose to do or not. 

Generally any compensation for working must comply with minimum wage laws - jury duty does not.

 

All in all, I find it hard to support jury duty pay as compensation for IRA contributions as defined by the IRS.

 

If the IRS denies the claim then you would probably need a tax attorney and go to tax court for a decision that very well could go against you.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Anonymous
Not applicable

Jury Duty, earned income, and Roth Contribution

since jury duty is not subject to se taxes, it would not be considered earned income.   the IRS has issued 

a memo

https://www.irs.gov/pub/irs-wd/0028035.pdf

 

it concludes the jury duty is not earned income for purposes of the earned income credit.   this would make it difficult to argue it's earned income for other purposes a

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