"other income" on Schedule C and ROTH contributions


L

lurker

I have been unemployed in the traditional sense for three years, so I
started drawings SS benefit early. I received a 1099-R for that.

Several times a month I have "other income" usually cash payments as I
perform services for people, and I even have a web site and other
"advertising".

Last year I filled out my first Schedule C so I could deduct the cost of
the web site and other obvious costs. I had a small loss according to
the Schedule-C

Is cash I "pay to self" "wages" or what (in respect to contributing to a
ROTH?)

This year is doing a little better and I expect to pay some self
employment tax on the Schedule C.

If I can put some in a Roth,

1)how do I make that contribution "legal" to the IRS since I don't have
a W-2?

2) Since my "earnings" is will be very low, is it deductible?

Carl
 
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P

Paul A Thomas

lurker said:
Last year I filled out my first Schedule C so I could deduct the cost of
the web site and other obvious costs. I had a small loss according to the
Schedule-C

Is cash I "pay to self" "wages" or what (in respect to contributing to a
ROTH?)

I trust you didn't deduct the cash you "pa[ied] to self" as wages on
Schedule C. If so, then file an amended return.

That being said, any ROTH or traditional IRA contribution is based on net
profits from the business.

You had a loss, no contribution.


This year is doing a little better and I expect to pay some self
employment tax on the Schedule C.
If I can put some in a Roth,

1)how do I make that contribution "legal" to the IRS since I don't have a
W-2?

Your Schedule C profits are sufficient.


2) Since my "earnings" is will be very low, is it deductible?

ROTH contributions are not deductible from your income.

There are however, some "saver credits" that may be available for
contributions to IRAs, among other similar types of retirement
contributions.
 

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