Self Employment income + IRA Contribution Max

[Tom in Carolina]

For 2020 I had a net self employment income of $12,000 <all numbers are approx>

Schedule 1 Adjustments to income

** Ded part of SE tax = $800

** SE health ins ded = $7,000

My wife had $26,000 in W2 income and $0 in any other retirement plan

I assume my wife can put the max of $7,000 since she is 50+ age

How much can I put into an IRA ?

I am 50+ and have no other "earned income"

i.e. does the $7,800 in SE deductions above count in the IRA Max Equation ??

Many thanks,

Tom

[ErnieS0]

You can both contribute $7,000 to an IRA.

[Tom in Carolina]

Hey Ernie,

Thanks for your help.

So....

These deductions are not part of the equation?

** Ded part of SE tax = $800

** SE health ins ded = $7,000

TIA,

Tom

[Deal Again · Accepted solution]

Those deductions do count against your earned income. However, in your case your wife's income covers you both as long as you are filing jointly. You cannot contribute more than your earnings which include yours and your wife's. You could have made no money and you could still contribute as long as the earnings are equal to or greater than the contribution up to the contribution limit.

[Tom in Carolina]

Hey Deal Again,

Thanks for your comments.  I try to think logically when doing Taxes, but the IRS does have it's own rational.

FWIW We used to deal Blackjack in our high school cafeteria for $0.25 an hand .... back in 1969 + 1970 !

Fun fun fun

Enjoy your weekend,

Tom