Level 4

Can even a Non-Deductible Traditional IRA Contribution be made without any tax penalty with ONLY Unearned Income?

Forum|Forum|5 years ago
February 23, 2021
2 replies
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Pro Series Professional Traditional IRA Contribution with ONLY Unearned Income

Feb. 23, 2021

Can even a Non-Deductible Traditional IRA Contribution be made without any tax penalty with ONLY Unearned Income?

The Taxpayer has only incomes such as pension, bank interest and dividends.

Pension $7500, Interest $5,000, Dividends $15,000

Can he make a Deductible Contribution to Traditional IRA without any tax penalty?

Can he make a Non-Deductible Contribution to Traditional IRA without any tax penalty?

Any thoughts / clarifications / updates would be highly appreciated.

Thanks and Regards.

Raj1

This topic has been closed for replies.

rbynaker

Level 13

No. Earned income is required. It can be spousal earned income if that applies.

qbteachmt

Level 15

Always use the current and applicable IRS resources when you are learning these things:

"Contributions

To contribute to a traditional IRA, you, and/or your spouse if you file a joint return, must have taxable compensation, such as wages, salaries, commissions, tips, bonuses, or net income from self-employment."

"Compensation for purposes of contributing to an IRA doesn't include earnings and profits from property, such as rental income, interest and dividend income, or any amount received as pension or annuity income, or as deferred compensation. In certain cases, other amounts may be treated as compensation for purposes of contributing to an IRA, including certain alimony and separate maintenance payments received, certain amounts received to aid in the pursuit of graduate and postdoctoral studies, and certain difficulty of care payments received."

https://www.irs.gov/taxtopics/tc451

https://www.irs.gov/forms-pubs/about-publication-590-a

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