Definition of Compensation for Traditional IRA Contribution

What is compensation for traditional IRA contribution purposes?

Compensation is earnings from working.

Compensation includes:

• Wages, salaries, etc.
• Commissions

• Self-employment income

• Alimony and separate maintenance payments

Compensation does not include:

• Earnings and profits from property, such as rental, interest and dividend income.
• Pension or annuity income.

• Deferred compensation received.

• Income from a partnership for which the person does not provide services.

• Any amounts excluded from income.

What is modified adjusted gross income (MAGI)?

Modified Adjusted Gross Income (MAGI) is generally income subject to tax before itemized deductions, personal exemptions, traditional IRA deduction and certain other adjustments.