Roth IRA contribution when earned income is only about 2K

[Prague]

Even though we ERed last year, I still do very small amount of consulting this year, and my best estimate is that my W2 earned income by end of the year will be between 2K-4K. We are currently in our early 50s, and I am curious whether/how much I and my spouse could contribute to Roth IRA given the small amount of earned income for this year (2020). According to what I read online, we are eligible to contributing 7K each person to our IRA, but it is not clear to me given the small amount of earned income, whether we can still contribute. For example, if my W2 shows a total wage (box 1) of $2,000, does that mean we can only contribute a total of $2K to Roth or we each can contribute $2K with the spousal contribution clause and brings the total contribution to $4K?

[RE2Boys]

The max that you can contribute to any IRA is the earned income for the year. So if your W-2 box 1 is $2K, the max that you and your wife can contribute to IRA's is $2K.

[Prague]

Thank you! In the event that my earned income exceed 7K, say 10K, does that mean that in addition to my contribution of 7K, my spouse can also contribute 3K that brings the total to 10K?

[cathy63]

Quote:

Originally Posted by Prague Thank you! In the event that my earned income exceed 7K, say 10K, does that mean that in addition to my contribution of 7K, my spouse can also contribute 3K that brings the total to 10K?

Yes. You can put 100% of your earned income or $7K per spouse, whichever is lower.

[RunningBum]

Just to be clear, your combined contribution cannot exceed your combined earned income. From
https://www.irs.gov/retirement-plans...ibution-limits

Quote:

Spousal IRAs If you file a joint return, you may be able to contribute to an IRA even if you did not have taxable compensation as long as your spouse did. The amount of your combined contributions can't be more than the taxable compensation reported on your joint return. See the formula in IRS Publication 590-A.

emphasis mine

[jollystomper]

Quote:

Originally Posted by RunningBum Just to be clear, your combined contribution cannot exceed your combined earned income. From https://www.irs.gov/retirement-plans...ibution-limits emphasis mine

This is what we did on our 2019 taxes. I had 0 earned income, but DW had around 12K. We were able to contribute 7K to DW's Roth IRA and around 5K to my Roth IRA.

[Prague]

Quote:

Originally Posted by jollystomper This is what we did on our 2019 taxes. I had 0 earned income, but DW had around 12K. We were able to contribute 7K to DW's Roth IRA and around 5K to my Roth IRA.

Thank you! Exact info that I need!