# How much money can a self-employed person put in his IRA

Consider a self-employed person (over 55) who wants to contribute to an IRA. His income from self employment is 8000. That is, on line 31 of his Schedule C, the number 8000 appears.

He cannot put into his IRA more than his net earnings from self-employment. Therefore he must subtract out the employer share of Social Security and Medicare tax. In this case, the amount of these taxes are: 0.0765*8000 or 612. Therefore one of the upper bounds on how much he can contribute is 8000 - 612 or 7388.

The standard limit is 6000 but since he is over 55, his limit is 7000. The amount of money he can contribute is the smaller of 7388 and 7000. Hence he can contribute 7000.

Do I have this right?

The person lives in the United States.

• Actually the deductible (employer) half of SE tax is 8000*.09235*.0765=565, see schedule SE part I, thus 8000-565=7435, but that doesn't matter because 6000+1000=7000 remains lower as you say. Remember if it matters you have until the unextended filing deadline, normally April 15 but this year April 18 (19 in MA ME), to make contributions for the prior year. Jan 21, 2022 at 3:07
• @dave_thompson_085 I like your comment. Could you post it as an answer? If you did, I could accept it and close the question.
– Bob
Jan 21, 2022 at 16:13