Isn't it mistaken and oversimplifying to say that there's no earned
income on Schedule E??

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victor wrote:

- quote -

Side issue: I believe that this question (deferred
compensation being earned or unearned income) is answered in
the regulations regarding IRC 469(e) [passive losses - of
all places!]. This is from memory, so I could be wrong.

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Earned income is that you have paid social security tax on
that year. That includes W2 and Schedule C income, but not
B, D, & E. I have a fair amount of deferred income in
retirement pay, but paid the the SS tax in the year I put it
in the account, not the year I took it out.

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mouln[at]yahoo.com (victor) posted:

- quote -

Earned income is wages reported on W-2 or self employment
business income. An annuity is not in this category, and
cannot be used to qualify as earned income for contributions
to an IRA.

But your question is a little muddled. If you have earned
income, plus an annuity (govt pension) -- in other words, if
you're a double-dipper <g> -- then your modified AGI might
be too high to qualify. If your employer has a Retirement
Plan, the limit for full deductbility is $45,000 (partial up
to $55,000) [MFJ: $65,000/partial to $75,000]. And, if your
employer does not offer a Retirement Plan, there's no limit
[with a partal limit only if you're filing MFJ and your
spouse has a Retirement Plan, starting at $150,000].

This is a very simplified outine, with full details
available in Pub 590.

Bill

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"victor" <mouln[at]yahoo.com> wrote:

- quote -

You misunderstand. The phaseouts of deductibility are based
on Modified Adjusted Gross Income (MAGI). See IRS
Publication 590.

- quote -

The taxable portion of your pension is part of MAGI, but it
is not earned income.

--
Phil Marti
Clarksburg, MD

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I have a conventional IRA. I understand yearly contributions
to the IRA account are deductible on your 1040 if your
earned income for year is less than $70,000.

Would an annuity (govt pension) be considered earned income
towards this $70,000 limit???

Thanks for your help!

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