IRA Contribution Limits -1099 income

[FLSUnFIRE]

I'll have a little 1099 income from my bike tours and I'd like to put it into my Roth IRA but not sure the amount I can contribute. To keep the math easy assume:


$1000 Gross Earned
$150 Self-Employment taxes due


Is my contribution limited to my gross ($1,000), Gross less employee portion of self employment tax ($925), or Gross less all Self-Employment taxes ($850)


Google has failed me on this one...

Thanks smart people!

 

[SevenUp]

$925. See the applicable Self-employment income calculation.

 

[Philliefan33]

Don't forget that with a Schedule C, you can use the self-employed health insurance deduction. Any health insurance premiums paid count - including Medicare. That adjustment to income happens on the 1040, not on the Schedule C, so I'm pretty sure it will not lower your net self-employed income for Roth contribution purposes, but will lower your AGI for income tax purposes.

So using your example numbers and assuming $1200 paid for health insurance premiums:

$1000 gross earning
$150 self-employment tax

yields $925 eligible for Roth contribution and $0 added to your AGI

 

[FLSUnFIRE]

$925. See the applicable Self-employment income calculation.

That's what I figured but would probably have defaulted to my net to be safe. Not big money but I'd rather throw it into the Roth if I don't need it. Hopefully will get a few more tours/higher rate per tour and earn more than the contribution limit this year. Sure having fun doing them and don't mind the extra nickles as prices keep going up.

 

[Sunset]

That's what I figured but would probably have defaulted to my net to be safe. Not big money but I'd rather throw it into the Roth if I don't need it. Hopefully will get a few more tours/higher rate per tour and earn more than the contribution limit this year. Sure having fun doing them and don't mind the extra nickles as prices keep going up.

If really start to make lots more, and will go over the normal Roth contribution level (~7K or 8K) per year. It will be time to open a self 401K (example at Vanguard)
It will allow larger Roth Contributions and you can still make the normal Roth contributions.