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 24:19:48:46 

Are proceeds from domain sales considered "earned income" in terms of US taxes

Labeled as question in General Domain Discussion, started by Crock, Feb 24, 2021

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  1. Crock

    Crock Discord Server Owner

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    As I am fairly young (30), I want to contribute the proceeds from domain sales to my Roth IRA for retirement, so that money can grow tax-free. However, you can only contribute "earned income". Do domain name sales qualify as "earned income" or only regular jobs?

    Thanks!
     
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  2. bmugford

    bmugford www.DataCube.com PRO VIP ICA Member ★★★★★★★★★★

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    It depends. Can if be earned income? Sure. Then you are not only subject to federal and state income tax, but also self employment tax (social security and medicare).

    There are other ways to get earned income, like consulting fees.

    There are also ways to get more into a ROTH than the yearly contribution limits.

    With a backdoor Roth, you basically start the money off in a traditional IRA, transfer it to a Roth IRA and then pay the taxes you owe on that money now so that you can let your investments grow tax-free and enjoy tax-free withdrawals later. It's that simple and it's perfectly legal.
     
  3. Crock

    Crock Discord Server Owner

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    Thank you so much! Very good information.
     
  4. Super-Annuation

    Super-Annuation eMoneyToken -Superannuation - Brekky - SuperFunds

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    Sure can be.

    Plenty of people I imagine take advantage of the tax advantages with domains.

    I'm not too familiar with USA federal legislation, however I believe the following may be true:

    You can borrow from your 401k to purchase domains, writing them as a business startup expense.

    Hope this helps.
     
  5. du6262

    du6262 Established Member

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    of course
    earned income
     

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