Multiple Schedule C's and IRA eligibility

[Guest mjkohler]

I've read the IRS publication 590 where it relates to compensation that is eligible for an IRA contribution.

I have one steady line of work: home-based telemarketing that I receive a 1099 for every year. I make about $6,000 (net) annually. I'm an independent contractor.

Some years I try my luck at network marketing, which usually involves some advertising expense, but it is totally separate from the home-based telemarketing I do. Some years I may have a profit and some years I have a loss with the network marketing. This is all reported on a separate Schedule C.

So here is my question: If I have a loss from network marketing, let's say it's $4,000, do I subtract that from the $6,000 I always make from telemarketing to get a net eligible taxable compensation of $2,000? Would $2,000 be the maximum I could contribute to an IRA?

In publication 590 it says if you have W-2 wages and you have a loss from Schedule C, do not subtract that loss when calculating taxable compensation.

So if I was doing telemarketing as an employee, not independent contractor, I would definitely have $6,000 of eligible taxable compensation. It seems like all that is important is that there is some material involvement in an income-producing activity.

An answer from a CPA or IRA specialist would be appreciated.

Thank you,

Mary-Jane

[GBurns]

Why wouldn't you also appreciate answers from tax lawyers, EA's or other tax specialists?

[JAMES PATRICK]

You net all your Schedule C's to determine if you have a profit or a loss. So your profit would be $2000 less 1/2 of your SE tax, and that would be your maximum eligible contribution.

[Guest mjkohler]

Why wouldn't you also appreciate answers from tax lawyers, EA's or other tax specialists?

To GBurns,

I didn't mean to exclude answers from other tax specialists. Sorry if I offended anyone. I just didn't want to get educated guesses from people who don't have knowledge of the tax code.

To JAMES PATRICK,

Thanks for your answer. I wish the tax code was a little more lenient in this area, but I can live with it.

Mary-Jane

[GBurns]

Maybe you should check and see whether or not being a CPA makes a person a tax specialist. The answer will surpirise you.