My wife and I are semi-retired. Neglecting our ages, social security and other income sources, for the sake of discussion, this year she will have real-estate sales commissions income of $7,000. She will have related business expenses of $4500. For purposes of determing her maximum Roth IRA contribution, is she limited to $2500, or the IRA maximum of $5,000?
If she is self-employed, it's net earnings that are "compensation." If she's an employee, it's her gross income.
A complete description of this is at
Net earnings from the trade or business less 1/2 SE tax less any SEP or similar contributons for taxpayer in this business.
Thanks Art K and Joe T. That is what I thought made sense, but it is always worthwhile to check.
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