0

My understanding is that tribal members of a federally recognized tribe who receive income from 1040 on Line 21 as :INDIAN GAMING PROCEEDS, INDIAN TRIBAL DISTRIB, NATIVE AMERICAN DISTRIB receive a 1099B. Subject to Fed Income tax, but not state.

I want to confirm such members can use this income for an IRA contribution, which must be classifed as "earned income".

Thanks!

Chris W. Rea
  • 31,999
  • 17
  • 103
  • 191
Lawrence
  • 11

1 Answers1

1

Leaning toward NO for the amount received via 1099-MISC for Tribal Distributions and listed on 1040 Schedule 1 line 21 as:

  • INDIAN GAMING PROCEEDS
  • INDIAN TRIBAL DISTRIB
  • NATIVE AMERICAN DISTRIB

The section on Compensation in Pub 590-A Contributions to Individual Retirement Arrangements (IRAs) lists out what is and is not considered compensation:

What Isn’t Compensation?

Compensation doesn’t include any of the following items.

  • Earnings and profits from property, such as rental income, interest income, and dividend income.

  • Pension or annuity income.

  • Deferred compensation received (compensation payments postponed from a past year).

  • Income from a partnership for which you don’t provide services that are a material income-producing factor.

  • Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b.

  • Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.

So unless you actually worked to receive your distribution, I would argue that tribal distributions are probably closer to a Pension or annuity income.

Morrison Chang
  • 2,752
  • 12
  • 15