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I'm trying to understand the 2017 IRA contribution limit as it relates to income reported in boxes 3 "other income" and 7 "Nonemployee compensation" on the 1099-misc. This is money paid to a graduate student in return for research activities. In previous years this was reported on a W-2, but for some unknown reason this year it is reported differently. I expect it to be reported in either box 3 or 7, but I don't know which. So, please answer for each if there is a difference.

Publication 590a might disqualify these earnings. I wouldn't classify the earnings as a scholarship, but perhaps as a fellowship:

Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2

However these answers suggest that 1099-misc nonemployee compensation can be generally contributed to an IRA:

Can you shelter 1099-MISC earnings in your IRA?

But due to the earlier quote from publication 590a it appears there may be an exception for fellowship income that disqualifies it, this is unclear to me. These answers also don't address income reported as "other income" if that even makes a difference. It seems strange to me that you could have eligible earnings reported on either a 1099-misc or a W-2 but if your earnings are fellowship payments, they are only eligible if reported on a W-2. This is part of where my confusion comes from.

Are these earnings eligible to be contributed toward an IRA? If possible, please provide IRS documentation or sections from US Code Title 26, to support your answer (this can include a better/alternate interpretation of Publication 590a) Please assume 100% of income on the 1099-misc is reported in full in box 3 or in full in box 7, this amount exceeds $5500, and that there aren't other earnings to consider.

  • One answer on #78028 explicitly says 'contractor' (which means nonemployee comp) and the other two are timestamped later than a comment by the OP that says the Q is for nonemployee comp. So nobody there is saying any box other than 7. But that leaves the question open for box 7. – dave_thompson_085 Jan 14 '18 at 9:17
  • @dave_thompson_085 Yes, you are right, I didn't see that comment. I have adjusted my question accordingly. – Matt Jan 14 '18 at 14:47

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