Roth IRA Contribution Warning, without going over limit
I contributed a total of $7,000 to my Roth IRA for the 2024 tax year.
When filing my taxes, I received an alert that I was contributing $7,000 over my limit. Is this correct? Am I not supposed to contribute anything to my IRA? And does anyone know how to fix this issue?
\Solved: Social Security does not count as income, and therefore you can't use it for a Roth IRA.
Answers
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Hi badattaxes,
Looks like you may have answered your own question, and FreeTaxUSA software will generate an alert if there is no taxable compensation.
In order to contribute to an IRA you must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment. Social security, while it may be taxable, is not considered compensation for this type of contribution.
There is no age limit to contribute to a traditional IRA, however you must have taxable compensation for purposes of contributing to an IRA. See IRS Publication 590-A for details.
This doesn't include earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation.
In certain cases, other amounts may be treated as compensation for purposes of contributing to an IRA, including certain alimony and separate maintenance payments received, certain amounts received to aid in the pursuit of graduate and postdoctoral studies, and certain difficulty of care payments received.
