Reply To: Custodial Roth IRA and what’s exactly earned income is?

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#71913
Kaye Thomas
Moderator

Your understanding is correct: the gross amount of wages is what limits the amount that can be contributed to an IRA. This will be the amount reflected in the box on Form W-2 labeled “Wages, tips, other compensation.” More on the subject of qualifying income (unlikely to be needed in your case) is available here:

Qualifying Income for IRA Contributions

The source of funds for the contribution doesn’t matter. It can be money saved from the wages or money from parents or anyone else.

This amount of income is below the threshold for filing a return, and the Roth contribution will not trigger a filing requirement. If income tax was withheld from the wages, a return will be needed to get that amount refunded.