Solved: Re: TurboTax apparently not considering my self-employed income as earned; not allowing a Roth IRA contribution

prfssr53 · Mar 29, 2020 4:01:09 PM

<P>I had $717 net income from tutoring last year (2019), after mileage expenses of $183. Since this income was not wages, it was self-employment income. I entered this income and expenses into TurboTax and it (the net) shows up correctly in the "Business Income and Expenses (Sch C)" line of the "Business Items" income category on my TurboTax 2019 Income Summary page. According to the IRS, self-employment income is earned income. This tutoring income was my only earned income last year, and so I should be able to contribute all of it to my Roth IRA as a deductible contribution. I entered into TurboTax that I contributed $717 to my Roth IRA. TurboTax came back with a message that I don't have enough earned income, and this $717 will be considered an excess contribution. What do I need to do to fix this?</P>

TurboTax apparently not considering my self-employed income as earned; not allowing a Roth IRA contribution

How much Net Profit do you have?

For self-employment income you can only contribute up to your net profit reduced by the deduction allowed for one-half of your self-employment taxes. See IRS publication 590 http://www.irs.gov/pub/irs-pdf/p590a.pdf

So check 1040 Schedule 1 line 27. You have to deduct that amount from your Schedule C Net Profit. That will give you the allowed contribution for the 1099Misc income.