6.3.1.1. Contributing to an IRA
The government puts limits on IRA deduction amounts. All contributions must be made only from earned income, as opposed to passive income. Earned income typically means wages, or as the IRS puts it, taxable compensation. (Unearned income includes dividends, capital gains, and interest on securities; social security benefits; unemployment benefits; child support; rental income; and inherited funds.) Traditional IRA contributions are limited to $6,000 per individual in 2022 and $6,500 in 2023; however, an additional $6,000 can be contributed to a non-