Roth maximum contribution for low earned income

[Perryinva]

I know all the Roth rules for high income, and there are a zillion sites explaining all that. What I can’t find anywhere, is what if the earned income amount is less than $6000 for the year? Like an occasional part time job. It appears I will have about $4500 gross earned income for 2021 for a small consulting job I did. Can I just put the entire $4500 in my Roth? Or is it some reduced net amount? I just want to make sure, as the amended forms for Roth contribution when income unexpectedly passed the upper limit have been a thorn in my side for over a year now thanks to IRS delays. My MAGI for the year, with Roth conversions, will still be under the MFJ income limit to qualify my contribution.

TIA.

 

[cathy63]

The max contribution allowed is the lesser of 100% of your joint earned income or $6000 ($7000 if you are over 50). If both spouses contribute to their Roth IRAs, then the combined contribution also can't exceed 100% of their joint earned income.

 

[VanWinkle]

Yep, you can put the entire 4500 in your Roth.

 

[SecondCor521]

It's limited to taxable compensation, which is described here:

https://www.irs.gov/publications/p590a#en_US_2020_publink1000230357

which I generally simplify to W-2 box 1 wages plus net profit from self employment minus 1/2 SE taxes. Which is accurate for most common cases.

 

[Perryinva]

Thanks, like I said, just wanted to be sure. I assume I have until 4/15/22 to make the deposit.

 

[Sue J]

Yes, that's my situation. I make under $6000 from my part time job and I contribute the entire gross income to my Roth IRA.

This is our only earned income.

 

[SecondCor521]

Thanks, like I said, just wanted to be sure. I assume I have until 4/15/22 to make the deposit.

You have until the filing deadline, which is 4/18/2022 or 4/19/2022 this year due to some holidays.

Also, it's unlikely but you might want to check if you qualify for the Retirement Savings Contribution Credit. See Form 8880 for details. It's for low-ish AGIs.

 

[Perryinva]

I plan on $100k Roth conversion this year so no Savers credit.