.jpg) |
| Your Earned Income |
Generally speaking, a compensation is what you earn from working. In other words, it is your earned income. It can include all of the items discussed below.
- Wages, salaries, etc. Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing your personal services are considered a compensation. In other words, any amount shown in box 1 of your Form W-2, Wage and Tax Statement, is a compensation.
- Commissions. An amount you receive that is a percentage of profits or sales price is a compensation.
- Self-employment income. If you are self-employed (either a sole proprietor or a partner), a compensation is the net earnings from your trade or business reduced by the total of the following:
·
The deduction for
contributions made on your behalf to retirement plans, and
·
The deduction allowed
for the deductible part of your self- employment taxes.
Self-employment loss. If you have a net loss from your self-employment,
do not subtract the loss from your salaries or wages when figuring your total compensation.
.jpg) |
| Be your own boss |
- Alimony and separate maintenance. For IRA purposes, a compensation includes any alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance.
- Nontaxable combat pay. If you were a member of the U.S. Armed Forces, a compensation includes any nontaxable combat pay you received. This amount should be reported in box 12 of your Form W-2 with a code Q.
Below Is A Summary of Compensation for Purpose of an IRA Contribution
Compensation includes: Compensation does not include:
Wages and salaries, etc Any earnings or profits from property
Commissions Interested
and dividend income
Self-employment income Income from pension
or annuity
Alimony and separate maintenance Deferred compensation
Nontaxable combat pay Any
amount you exclude from income
No comments:
Post a Comment