I apologize if this question is not warrant asking. Though I was wondering if taxable income earned by the trust distributed on the K-1 form would qualify me as the trustee to contribute to a Roth IRA. I did not work the year of 2018 since I was still a student.



No, this income cannot be used to fund an IRA because trust distributions are not earned income. IRAs can only be funded by earned income due to employment.

Even if you have some tax liability (from accrued interest, for example) from the trust distribution, it’s still unearned income.

  • I apologize if I should not be discussing this, is there a way in order to frame the distributions I received as freelance income and pay taxes on it? Would the IRS need the confirm that I actually had clients that payed me? Thank you for the quick response. – Justin Fulkerson Mar 8 '19 at 6:40
  • @JustinFulkerson Just remember that the IRS gets a copy of your K-1 form and so it knows that you got the money from.the K-1 and expects to see it on your income tax return in the appropriate spot, and that spot is not Schedule C unless the K-1 form says that it was self-employment income. This is not something that will be noticed right when you file your tax return -- "Return accepted" merely means that the arithmetic was done correctly on the return submitted -- but the IRS computers will grind through your return later and verify that all the data entries match up with their data. – Dilip Sarwate Mar 8 '19 at 13:29

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