ROTH IRA Income Question

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DollarsInMyRamen
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Joined: Wed Jul 06, 2016 10:23 pm
Location: Portland, OR

ROTH IRA Income Question

Post by DollarsInMyRamen »

Hey fellow Bogleheads - I could use some help.

I am 20 years old and my goal for investing at this time is to max out my ROTH IRA every year. Unfortunately, I lost my job due to a company shut-down; therefore, I have no earned income. I currently attend school and get it paid for by scholarships and being a Resident Assistance. Due to being an RA, my chances for earning income are minimal. I plan on earning money on the side by way of small gigs and tutoring, but none of these will come in the form of a paycheck. I do plan to earn $5,500 from these side-jobs.

Does this income qualify me for the earned income requirement of ROTH IRAs?

I still want to fund my ROTH IRA, how can I do it?

Thank you kindly,

Nick
golfallday
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Joined: Sat Feb 14, 2009 3:43 am
Location: College Point, NY

Re: ROTH IRA Income Question

Post by golfallday »

As long as it's earned income you can fund a Roth IRA. The money earned from gigs and tutoring would qualify. You will have to document this income though. If you are paid by a personal check, make a copy and keep it in a folder. If you are paid in cash, make a detailed record of the amount you were paid and who paid you for whatever service you rendered on a certain date. IRS website has all sorts of info on this.
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LAlearning
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Location: Los Angeles

Re: ROTH IRA Income Question

Post by LAlearning »

You need earned income. You can Google the IRS rules for this.
I know nothing!
DSInvestor
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Joined: Sat Oct 04, 2008 11:42 am

Re: ROTH IRA Income Question

Post by DSInvestor »

Any income that you earned at your job in 2016 will be reported on W-2. If you have already earned $5500 at that job, then you're good for 2016 Roth IRA contributions. If for 2017, you will only have side gig and tutoring income, you can self report that income on your 2017 tax return as self employed income (schedule C and SE). All tax software supports this and it is easy. Make sure you set aside additional money for self employment tax which is essentially the employee and employer portions of social security and medicare.
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Engineer250
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Joined: Wed Jun 22, 2016 1:41 pm

Re: ROTH IRA Income Question

Post by Engineer250 »

This other thread is about a minor but a lot of the record-keeping and such might apply to your situation:
viewtopic.php?f=1&t=195406
Where the tides of fortune take us, no man can know.
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