Who Can Set Up a Traditional IRA? You can set up and make contributions to a traditional IRA if you(or, if you file a joint return, your spouse) received taxablecompensation during the year and you were not age 70 1/2 by the end of the year. You can have a traditional IRA whether or not you covered by anyother retirement plan. However, you may not be able to deduct all ofthe contributions if you or your spouse are covered by an employerretirement plan. See How Much Can I Deduct? later. What Is Compensation? As stated earlier, to set up and contribute to a traditional IRA,you or your spouse must have received taxable compensation. This ruleapplies to both deductible and nondeductible contributions. Generally,what you earn from working is compensation. chambres d'hotel LimerickCompensation includes the items discussed next. Wages, salaries, etc.Wages, salaries, tips, professional fees, bonuses, and otheramounts you receive for providing personal services are compensation.The IRS treats as compensation any amount properly shown in box 1(Wages, tips, other compensation) of Form W-2,Wage and Tax Statement, provided that amount is reduced byany amount properly shown in box 11 (Nonqualified plans).Scholarship and fellowship payments are compensation for this purposeonly if shown in box 1 of Form W-2. Commissions.An amount you receive that is a percentage of profits or salesprice is compensation. Self-employment income.If you are self-employed (a sole proprietor or a partner),compensation is the net earnings from your trade or business (providedyour personal services are a material income-producing factor),reduced by the deduction for contributions made on your behalf toretirement plans and the deduction allowed for one-half of yourself-employment taxes. Compensation includes earnings from self-employment even if theyare not subject to self-employment tax because of your religiousbeliefs. See Publication 533,Self-Employment Tax, for moreinformation. When you have both self-employment income and salaries and wages,your compensation includes both amounts. Self-employment loss.If you have a net loss from self-employment, do not subtract theloss from your salaries or wages when figuring your totalcompensation. Alimony and separate maintenance.Hannover hotel roomsTreat as compensation any taxable alimony and separate maintenancepayments you receive under a decree of divorce or separatemaintenance. What Is Not Compensation? Compensation does not include any of the followingitems. Earnings and profits from property, such as rental income,interest income, and dividend income. Pension or annuity income. Deferred compensation received (compensation paymentspostponed from a past year). Income from a partnership for which you do not provideservices that are a material income-producing factor. Any amounts you exclude from income, such as foreign earnedincome and housing costs.