I used to work for many years and have a pretty good Roth IRA. Now, I'm self-employed. From what I understand from Fidelity (where my Roth IRA is) that I can contribute this year (2001) if I have either compensation or earned income(for self-employed). What is earned income? Is it the profit from my business? What sort of income in my business (selling specialty merchandise) would be considered "earned income". I was under the impression that I could not contribute to a Roth IRA, but had to open a Keough plan (which I may do for next year), but am I wrong? Can I contribute? Thanks.Earned income is probably close to the profit from your business before you pay yourself. Your earned income is also what you would pay social security (until you reach the limit) and medicare taxes on. Don't forget to pay these taxes each quarter.Look at schedule C for the 1040 tax return and schedule SE. Read the instructions and this will probably help.See IRS.GOV for the forms and instructions.Also look at a SEP to see if that might meet your needs instead of a Keough plan. Depends on how much you will be putting in.
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