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If you're astute (and you know you lot are!), you already know that one of the main requirements for making contributions to an IRA is that y'all must take earned income. For most folks, that means you have a chore... just a job isn't a requirement. Here are four ways that yous tin can have "earned income" without a job - plus a few ways to make contributions without having paid ordinary income tax on the wages. These exceptions are for either kind of IRA, traditional or Roth.

Four Ways to Contribute to an IRA Without a Job

  1. If your income is solely from exercising not-qualified stock options. When you lot exercise a not-qualified stock selection, the taxable component of the option exercise is considered taxable income, and therefore is eligible for contribution to an IRA.
  2. If you lot receive alimony, it is taxable equally ordinary income, which is eligible for an IRA contribution.
  3. Scholarships and Fellowships - if these are taxable, that is, reported in box i of a W2 grade, they're eligible for contribution to an IRA.
  4. Spousal contribution. If your spouse has earned income (and you have none or not enough to make a maximum contribution), you are eligible to make an IRA contribution based on your spouse's income. The limit is that the full of all IRA contributions (yours and your spouse'south) cannot exceed the earned income of the working spouse.

A Few Ways to Make Contributions Without Paying Tax on the Income

  1. Not-taxable combat pay, which is reported in box 12 of your W2 form, is also eligible for contribution to an IRA.
  2. Exempt students, with a part-time chore at the school (for case) can make IRA contributions.
  3. If your income is less than your exemption and deductions, effectively you are not paying tax on the earnings - but the IRA contribution is based upon MAGI, so you lot can still make an IRA contribution with the non-taxed funds.

If you happen to fit into one of the above situations, you lot may be able to make a contribution to an IRA for the year in which the income is received.