k-1 income and IRA contribution
Bill takes a salary from his “S” Corp and receives a k-1. Does the k-1 income count towards his ability to contribute to his IRA?
Bill takes a salary from his “S” Corp and receives a k-1. Does the k-1 income count towards his ability to contribute to his IRA?
Permalink Submitted by David Mertz on Wed, 2024-03-06 21:02
No. Nothing reported on Schedule K-1 (Form 1120-S) is compensation. Bill’s compensation from the S-corp that will support an IRA contribution is the amount of wages reported in box 1 of his W-2 from the S-corp. Bill is required to receive reasonable compensation from the S-corp and must be reported on the W-2.