One of the primary ways to save for retirement is by making regular contributions to your Individual Retirement Account (IRA). See this article to learn more about choosing between a traditional and Roth IRA.
Only eligible individuals can make regular contributions to IRAs, and one of the primary eligibility requirements is having compensation. For this purpose, eligible compensation includes:
- Wages, salaries, tips, professional fees, bonuses and other amounts reported in box 1 of IRS Form W-2, Wage and Tax Statement.
- Commissions, and
- Self-employment income.
Additional compensation guidance is found on the IRS website.
If you do not have eligible compensation, but your spouse does, you can use your spouse’s compensation to meet your compensation requirement as long as that income is sufficient to cover your contributions and any IRA contributions that your spouse makes to their IRA for the year. Please note that you must file a joint tax return with your spouse and meet all the other eligibility requirements to your IRA to make these contributions.