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Level 2
posted Feb 5, 2020 6:54:56 AM

Roth IRA contributions / baby sitting income

In 2018 my daughter made $1,000 babysitting. She contributed $1,000 to her Roth IRA. We reported it in Turbotax under "miscellaneous income" then "other reportable income". There was no problem. It placed the income under line 1 on 1040. This year under the same circumstances the software is stating she is not eligible for a Roth contribution and placing the income on line 7a on form 1040. Has the law changed? Is babysitting not earned income?

 

0 2 953
2 Replies
Expert Alumni
Feb 5, 2020 7:17:06 AM

No, the law has not changed. Babysitting is earned income. You entered her income in the wrong category. Your daughter's babysitting income should be reported as self-employment income on Schedule C not as Miscellaneous Income or other reportable income.

  • Other income is money you receive from something like a prize, award, lawsuit settlement, etc.

See How does my side job affect my taxes?

 

 

Level 2
Feb 5, 2020 7:28:53 AM

Actually, I figured out a workaround. Babysitting income is reportable as being a household employee. If less than $2100 per employer no W2 is required. The income is then considered earned income and makes the Roth Contribution eligible.