Roth IRA Income Limitations?

Does income received from a cash bonus, selling stock or any other type of investment....count towards the income limitations set that determine whether you can contribute to a Roth IRA? Or is it only your salary from your job that the income limitation was intended for?

All of the income you listed is included in your AGI, so it counts toward the Roth IRA income limitation.

The Roth IRA limitation is acutally based on your "Modified AGI".

To arrive at your modified AGI, start with your adjusted gross income and then add back the following items:

Any deduction you claimed for a regular contribution to a traditional IRA.

Any deduction you claim for student loan interest or qualified tuition and related expenses.

Any income you excluded because of the foreign earned income exclusion.

Any exclusion or deduction you claimed for foreign housing.

Any interest income from series EE bonds that you were able to exclude because you paid qualified higher education expenses.

Any employer-paid adoption expense you excluded.

Any amount claimed as domestic production activities deduction.

There's an additional modification that's made only when you're determining modified AGI for purposes of the Roth IRA. In this case you exclude any income you report as a result of converting a traditional IRA to a Roth IRA. Without his favorable rule, the income reported on the conversion could prevent you from making additional Roth IRA contributions.

Your AGI determines your eligibility.....

You are eligable for a Roth IRA is AGI less than $160,000 Married filing jointly or $110,000 single. If you are beyond that, you might want to try a Traditional IRA.

Bad thing about Traditional IRA is you have to withdrawl the money after you reach 70.5 years old. Also you have to pay taxes on gains, dividens and interest when you withdrawl it. However, the Roth IRA is Tax-deferred growth and tax-free qualified withdrawls.

Be careful about using a filing status of married filing separately IF you lived with your spouse at any time during the year ---> You will not be able to make a Roth IRA contribution if your modified AGI is $10,000 or more.