Jury service, usable for IRA contribution?

[jim584672]

I have been searching for an answer to this question and seem to get conflicting results.
It says no FICA or Medicare is owed, but some sites say it is ok for IRA contributions.
Since I have no earned income it would be nice to throw a few dollars in an IRA if I could. Any insights?

 

[braumeister]

Almost certainly not.

Here is an IRS ruling that jury duty pay is not considered earned income for the Earned Income Credit, so I would assume that applies to any other question about it.

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

 

[jim584672]

I saw that. But I see sites like Ed Slott saying the opposite.

 

[braumeister]

Can you provide a link to that, showing the source of the opinion?

 

[jim584672]

https://www.irahelp.com/slottreport/you-must-have-earned-income-contribute-ira

 

[karen1972]

Interesting, Turbo Tax wouldn't let me use any of my 'other income' for an IRA. This included things like $100 I got for doing a survey (which I personally think I "earned") and jobs that don't provide a 1099-MISC. Like Election day we get like $150 for working but its under the $600 limit so won't receive anything.

 

[jazz4cash]

Gosh. How much does jury duty pay where you live?

 

[jazz4cash]

Gosh. How much does jury duty pay where you live?

 

[Telly]

Gosh. How much does jury duty pay where you live?

That's the first thing I thought of! Here, the $6 I get won't even cover expenses to/from the courthouse!

 

[gauss]

Interesting question.

Note that the IRS test for IRA contributions is whether it is considered "taxable compensation" not earned income.

Worse case, if you make the contribution and it is later disallowed, what is your downside risk? It think it is 6% per year plus a small amount of interest.

-gauss

 

[rothlev]

If you report the income on Sch. C it will count for an IRA, I would think it unlikely to be an audit item. If you report the income on line 21 your software assumes it is not earned income, but other taxable income.

 

[rothlev]

everything in tax code is not cut and dried , and if you have some logical reasoning behind your decision, with documentation, I would go for it.

 

[rothlev]

Interesting, Turbo Tax wouldn't let me use any of my 'other income' for an IRA. This included things like $100 I got for doing a survey (which I personally think I "earned") and jobs that don't provide a 1099-MISC. Like Election day we get like $150 for working but its under the $600 limit so won't receive anything.

If you report it on schedule C , it will be considered earned income by the software. It all hinges on where on the 1040 , the number lands.

 

[ransil]

That's the first thing I thought of! Here, the $6 I get won't even cover expenses to/from the courthouse!

Same here its been awhile but was something like $2.50. Parking was $6 for the day.

 

[Dash man]

Same here its been awhile but was something like $2.50. Parking was $6 for the day.

Wow! We’re lucky here in PA. I got a whole $13/day plus free parking!

 

[pb4uski]

The IRS guidance of earned for EIC purposes is pretty definitive:

Therefore, amounts paid to jurors for services performed as a juror are not net earnings from self-employment. Because jury fees are neither wages, salaries, tips, nor other employee compensation, nor net earnings from self-employment, jury fees are not earned income for purposes of the EIC

I can't see that they would use a different definition for IRA contribution purposes.

OTOH, Ed Schlott suggests that it is IF reported in Box 1 of Form W-2:

Other sources of earned income include taxable alimony or maintenance payments, combat pay (even though it may be excluded from federal income tax), accrued vacation pay, director’s fees, jury fees, and scholarship or fellowship payments (if included in Box 1 of Form W-2). Any of these forms of income can be used to make an IRA contribution. Additionally, you can combine these sources to determine your earned income for the taxable year.

Where I would come down is if it is reported on Box 1 of Form W-2 then take it knowing that there may be some tax risk.... otherwise no.

 

[Texas Proud]

First, it does not belong on a Sch C as that is for business income.... you are NOT in the business of being a juror....


Next, it will never show up in box 1 of a W-2.... the only way I can see that happening (and this is just a guess) is if you are on a grand jury which meets for a good amount of time...



I was on a regular jury for 2 weeks and even sequestered when it was time to decided guilt... never go anything reporting that income...


SOOO, has anybody ever received an IRS form reporting jury duty income?

 

[Walt34]

Wow! We’re lucky here in PA. I got a whole $13/day plus free parking!

Wow, some states are real skinflints. Here in WV we get a whopping $15/day. If you go to the right place, that's enough to buy lunch with maybe some change left over.

 

[Texas Proud]

We get $6 per day, but have to pay for parking if you want to park... we do get free bus service...


Now, they are clever when it comes to putting you on a jury... they put you on a panel and you go to the courtroom... but they dismiss you just before lunch and tell you to be back by 1 or so... which means they do not have to buy lunch... if you are on a jury after that you do get a free lunch as they have to keep you together and watch you...

 

[jim584672]

NY does $40 a day. I can't believe how low they pay in other states.

 

[aaronc879]

$25/day plus mileage. No parking costs. Unless it was multiple weeks I wouldn't bother trying to get it counted as earned income.

 

[kaneohe]

The IRS guidance of earned for EIC purposes is pretty definitive:



I can't see that they would use a different definition for IRA contribution purposes.

OTOH, Ed Schlott suggests that it is IF reported in Box 1 of Form W-2:

Other sources of earned income include taxable alimony or maintenance payments, combat pay (even though it may be excluded from federal income tax), accrued vacation pay, director’s fees, jury fees, and scholarship or fellowship payments (if included in Box 1 of Form W-2).



Where I would come down is if it is reported on Box 1 of Form W-2 then take it knowing that there may be some tax risk.... otherwise no.

any chance that the reference to Box 1 of Form W2 relates only to the shcolarship issue? https://www.schwab.com/resource-center/insights/content/paying-for-college-are-scholarships-taxable

 

[pb4uski]

Possible. Unclear from the wording.

 

[rothlev]

First, it does not belong on a Sch C as that is for business income.... you are NOT in the business of being a juror....
not exactly correct


Next, it will never show up in box 1 of a W-2.... the only way I can see that happening (and this is just a guess) is if you are on a grand jury which meets for a good amount of time...



I was on a regular jury for 2 weeks and even sequestered when it was time to decided guilt... never go anything reporting that income...


SOOO, has anybody ever received an IRS form reporting jury duty income?

any earned income ( not passive income, ie: a reward, a gambling winning, dividends or interest ) can be reported on sch. C if it is not on a w-2. You do not have to have a business. the key is was this income derived from work. Normally, jury duty goes on line 21 which is the line for other income ( ie gambling winnings rewards etc... ). However if the OP was on the jury for a long time and it was in his own best interest to report the income in sch. C, I think he has a strong case. In any event , unlikely the IRS would look twice.
( I am an enrolled agent ). However, putting this income on sch. C does subject it to self employment tax, which may negate the benefit of the IRA deduction. ( if the income is over $400.00 it is subject to the SE tax of around 15%

 

[Texas Proud]

any earned income ( not passive income, ie: a reward, a gambling winning, dividends or interest ) can be reported on sch. C if it is not on a w-2. You do not have to have a business. the key is was this income derived from work. Normally, jury duty goes on line 21 which is the line for other income ( ie gambling winnings rewards etc... ). However if the OP was on the jury for a long time and it was in his own best interest to report the income in sch. C, I think he has a strong case. In any event , unlikely the IRS would look twice.
( I am an enrolled agent ). However, putting this income on sch. C does subject it to self employment tax, which may negate the benefit of the IRA deduction. ( if the income is over $400.00 it is subject to the SE tax of around 15%

Well, I will disagree with you. The instructions for Sch C on the IRS website starts with this:

Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business.
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How is being a juror meeting this definition? There is no continuity or regularity in being a juror... And it even states that a sporadic activity (a juror) or hobby does not qualify as a business...


BTW, I am a CPA and if someone insisted this be put on a Sch C I would tell them to go elsewhere...