Contribute to a ROTH with reported W-2 but not actual income
I am retired and have pension income reported on a 1099-R, but I also get a W-2 with income reported in box 1 (Wages,tips,other compensation).
This is due to life insurance benefits that the company pays for me.
Since this is reported as income and I have to pay taxes on it, can I then contribute up to the amount in box 1 to an ROTH IRA for the tax year reported?
Permalink Submitted by Alan Spross on Thu, 2007-12-13 02:03
Yes, the formula for taxable compensation (earned income) for W-2 recipients is Box 1 less Box 11. Starting in the year you turn 70.5, that IRA contribution would have to be to a Roth IRA. Prior to that you have your choice as to IRA type. You may also be eligible to parlay an IRA contribution into a Savers tax credit if your total income falls below the threshold and you meet the other rules per Pub 590, p 73 (06 edition).