Paid in VISA gift card - contribute to ROTH?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
tortoiseinvestor
Posts: 2
Joined: Wed Nov 07, 2018 2:18 pm

Paid in VISA gift card - contribute to ROTH?

Post by tortoiseinvestor » Sat Nov 16, 2019 4:36 pm

My son (3 years old) is participating in a medical study. We will receive about $2000, which will be reported to the IRS and they are requiring a W9. However, rather than a check, the money is paid with a VISA gift card. Can we put the money from the gift card in a ROTH?

Silk McCue
Posts: 4160
Joined: Thu Feb 25, 2016 7:11 pm

Re: Paid in VISA gift card - contribute to ROTH?

Post by Silk McCue » Sat Nov 16, 2019 5:02 pm

Welcome to Bogleheads with your first post!

It won’t matter where the actual funds come from from a transactional perspective. If this is being reported as earned income to the IRS that is all that matters.

Cheers

HomeStretch
Posts: 4010
Joined: Thu Dec 27, 2018 3:06 pm

Re: Paid in VISA gift card - contribute to ROTH?

Post by HomeStretch » Sat Nov 16, 2019 5:10 pm

Income from participation in a medical study is taxable income but it may not be earned income (which is required to make an IRA contribution).

ClassySDLivin
Posts: 31
Joined: Sat Jan 28, 2017 8:25 pm

Re: Paid in VISA gift card - contribute to ROTH?

Post by ClassySDLivin » Sat Nov 16, 2019 5:19 pm

Without digging into your son's activity it is not possible to determine if the income is "earned" and qualifies to be considered as such for IRA contribution purposes. Issuing a W9 does not indicate the income is earned (although it is likely taxable, even if an exemption to taxability applies). The IRS generally takes the position that infrequent activities do not qualify as earned income. Even the activity is deemed qualifying, the visa gift card would be treated the equivalent of cash (assuming their are no unusual restrictions on the card).

Topic Author
tortoiseinvestor
Posts: 2
Joined: Wed Nov 07, 2018 2:18 pm

Re: Paid in VISA gift card - contribute to ROTH?

Post by tortoiseinvestor » Sat Nov 16, 2019 5:34 pm

Thanks for the responses! It's a visit for a medical every 2 weeks for a year. Also there are three day long visits. How do I determine whether it's earned income or not?

mhalley
Posts: 8070
Joined: Tue Nov 20, 2007 6:02 am

Re: Paid in VISA gift card - contribute to ROTH?

Post by mhalley » Sat Nov 16, 2019 5:43 pm

Intuit days it is taxable but not earned income
.
https://www.google.com/url?sa=t&source= ... Us&ampcf=1

Katietsu
Posts: 3042
Joined: Sun Sep 22, 2013 1:48 am

Re: Paid in VISA gift card - contribute to ROTH?

Post by Katietsu » Sat Nov 16, 2019 6:10 pm

Your son should receive a 1099-MISC with the income reported in box 3 for Other Income. The bad news is that it is not earned income making him eligible for a Roth. The good news is that it is not self employed income so is not subject to self employment taxes.

Trader Joe
Posts: 1582
Joined: Fri Apr 25, 2014 6:38 pm

Re: Paid in VISA gift card - contribute to ROTH?

Post by Trader Joe » Sat Nov 16, 2019 6:17 pm

tortoiseinvestor wrote:
Sat Nov 16, 2019 4:36 pm
My son (3 years old) is participating in a medical study. We will receive about $2000, which will be reported to the IRS and they are requiring a W9. However, rather than a check, the money is paid with a VISA gift card. Can we put the money from the gift card in a ROTH?
As a professional in this field, your scenario seems interesting/odd to me:

Did your three (3) year old sign the required Patient Informed Consent Form(s)?

retiredjg
Posts: 39953
Joined: Thu Jan 10, 2008 12:56 pm

Re: Paid in VISA gift card - contribute to ROTH?

Post by retiredjg » Sat Nov 16, 2019 6:29 pm

Why do people keep referring to "earned income" when the IRS only looks at "compensation"?

Publication 590 does not talk about earned income (other than foreign earned income). It talks about compensation. I don't know if this makes a difference in the answer to the question, but this could be an important point. Or not. :happy

Spirit Rider
Posts: 12639
Joined: Fri Mar 02, 2007 2:39 pm

Re: Paid in VISA gift card - contribute to ROTH?

Post by Spirit Rider » Sat Nov 16, 2019 9:09 pm

retiredjg wrote:
Sat Nov 16, 2019 6:29 pm
Why do people keep referring to "earned income" when the IRS only looks at "compensation"?

Publication 590 does not talk about earned income (other than foreign earned income). It talks about compensation. I don't know if this makes a difference in the answer to the question, but this could be an important point. Or not. :happy
Earned income at least has the probability that it is also compensation. If it is not earned income, it cannot be compensation.

Post Reply