Real Estate Professional no W-2 and IRA contributions

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Real Estate Professional no W-2 and IRA contributions

John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

I have no W-2 job, can I still contribute to my E*TRADE Roth IRA account

Situation:

I self-manage my LTR portfolio

I self-manage my STR property that is an hour away.

I buy tax liens at auction every year.

I have flipped at least one property per year, but not sure that will happen every year.

I am a RE professional 

I also have a Solo401k, but I only contribute to it prom proceeds of a flip.

So can I still contribute to a standard Roth IRA without a w-2 job?

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Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
4y
Originally posted by @John Underwood:

You can structure it to generate earned income via a separate property management company. The tradeoff is that you will trigger a 15% self-employment tax on this income.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    4y
    Originally posted by @John Underwood:

    I have no W-2 job, can I still contribute to my E*TRADE Roth IRA account

    Situation:

    I self-manage my LTR portfolio

    I self-manage my STR property that is an hour away.

    I buy tax liens at auction every year.

    I have flipped at least one property per year, but not sure that will happen every year.

    I am a RE professional 

    I also have a Solo401k, but I only contribute to it prom proceeds of a flip.

    So can I still contribute to a standard Roth IRA without a w-2 job?

    Roth IRA has limitations based on the AGI.

    If you are below the threshold and have earned income, yes. 

    If you are above the threshold, then you have to do backdoor Roth IRA.

    [email protected]941-914-7779
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    0Reply
  • John UnderwoodPro Member
    OP
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Originally posted by @Ashish Acharya:
    Originally posted by @John Underwood:

    I have no W-2 job, can I still contribute to my E*TRADE Roth IRA account

    Situation:

    I self-manage my LTR portfolio

    I self-manage my STR property that is an hour away.

    I buy tax liens at auction every year.

    I have flipped at least one property per year, but not sure that will happen every year.

    I am a RE professional 

    I also have a Solo401k, but I only contribute to it prom proceeds of a flip.

    So can I still contribute to a standard Roth IRA without a w-2 job?

    Roth IRA has limitations based on the AGI.

    If you are below the threshold and have earned income, yes. 

    If you are above the threshold, then you have to do backdoor Roth IRA.

    I already have 3 different Roths. 

    Do I have earned income without a W-2 based on what I have going on? 

    1Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    4y
    Originally posted by @John Underwood:
    Originally posted by @Ashish Acharya:
    Originally posted by @John Underwood:

    I have no W-2 job, can I still contribute to my E*TRADE Roth IRA account

    Situation:

    I self-manage my LTR portfolio

    I self-manage my STR property that is an hour away.

    I buy tax liens at auction every year.

    I have flipped at least one property per year, but not sure that will happen every year.

    I am a RE professional 

    I also have a Solo401k, but I only contribute to it prom proceeds of a flip.

    So can I still contribute to a standard Roth IRA without a w-2 job?

    Roth IRA has limitations based on the AGI.

    If you are below the threshold and have earned income, yes. 

    If you are above the threshold, then you have to do backdoor Roth IRA.

    I already have 3 different Roths. 

    Do I have earned income without a W-2 based on what I have going on? 

    Flipping Income gives you earned icnome. 

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5241 Reviews
    WebsiteView Page
    TaxMD® | AI-Powered Tax Planning
    WebsiteView Page
    1Reply
  • John UnderwoodPro Member
    OP
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Originally posted by @Ashish Acharya:
    Originally posted by @John Underwood:
    Originally posted by @Ashish Acharya:
    Originally posted by @John Underwood:

    I have no W-2 job, can I still contribute to my E*TRADE Roth IRA account

    Situation:

    I self-manage my LTR portfolio

    I self-manage my STR property that is an hour away.

    I buy tax liens at auction every year.

    I have flipped at least one property per year, but not sure that will happen every year.

    I am a RE professional 

    I also have a Solo401k, but I only contribute to it prom proceeds of a flip.

    So can I still contribute to a standard Roth IRA without a w-2 job?

    Roth IRA has limitations based on the AGI.

    If you are below the threshold and have earned income, yes. 

    If you are above the threshold, then you have to do backdoor Roth IRA.

    I already have 3 different Roths. 

    Do I have earned income without a W-2 based on what I have going on? 

    Flipping Income gives you earned icnome. 

    What if I have a year I don't have flipping income?

    Would.self management of my STR and LTR properties plus being a tax lien investor qualify as earned income?

    1Reply
  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    4y
    Originally posted by @John Underwood:

    You can structure it to generate earned income via a separate property management company. The tradeoff is that you will trigger a 15% self-employment tax on this income.

    3Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @Michael Plaks:
    Originally posted by @John Underwood:

    You can structure it to generate earned income via a separate property management company. The tradeoff is that you will trigger a 15% self-employment tax on this income.

    Quick google search…

    https://www.investopedia.com/r...

     Backdoor:

    https://www.nerdwallet.com/article/investing/backdoor-roth-ira#:~:text=A%20%22backdoor%20Roth%20IRA%22%20is,taxes%20and%20you're%20done.

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    4y

    @John Underwood Yes a W-2 is not needed to have "earned Income"  It is possible that you could structure your business so that your management activities could count as earned income. I couldn't tell you how but a good accountant could.

    One issue might be that you can't contribute to an IRA if you have some other types of retirement accounts. I don't know the details but I recall my CPA telling me that. So check with a good CPA.

    The "Backdoor Roth" conversion might go away with the proposed tax law changes. Last year might have been the last year you could do it.

    I know you are a do it yourself kind of guy but It might be worth contacting a CPA if you don't use one now.  My guy has definitely saved me more that he cost. My guy Jeffrey Stoller and Associates does take out of state clients. I recommend him highly.

    PS : I should heave read all the other replies I see now many already made these points. 

    0Reply
  • John UnderwoodPro Member
    OP
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Quote from @Ned Carey:

    @John Underwood Yes a W-2 is not needed to have "earned Income"  It is possible that you could structure your business so that your management activities could count as earned income. I couldn't tell you how but a good accountant could.

    One issue might be that you can't contribute to an IRA if you have some other types of retirement accounts. I don't know the details but I recall my CPA telling me that. So check with a good CPA.

    The "Backdoor Roth" conversion might go away with the proposed tax law changes. Last year might have been the last year you could do it.

    I know you are a do it yourself kind of guy but It might be worth contacting a CPA if you don't use one now.  My guy has definitely saved me more that he cost. My guy Jeffrey Stoller and Associates does take out of state clients. I recommend him highly.

    PS : I should heave read all the other replies I see now many already made these points. 


     I definitely have a CPA that does my taxes.  I like to get different takes on tax questions.

    1Reply
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