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Is income from an LLC passed through to personal tax return

considered earned income, enabling me...
Is income from an LLC passed through to personal tax return considered earned income, enabling me to contribute to a traditional IRA?
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12/11/2017
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Happy Holidays!! Thank you for choosing this Q&A service for assistance. My name is***** am prepping my response and I will get back to you shortly.

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In brief, yes, if you are a single member LLC, the bot***** *****ne profit is considered earned income. SEE BELOW:

-------------------------------------------

One-member LLC (taxed as a sole proprietorship): The bottom-line profit is all considered earned income, even if it's not distributed to the owner.Multimember LLC (taxed as a partnership): In a multimember LLC, there are two types of members: a managing member, who manages the activities of the LLC, and members, who are typically only investors. The managing member is considered the active owner; therefore, his pro-rata share of bottom-line profit is considered earned income, even if it's not distributed to him. Members are considered inactive owners; therefore, their pro-rata share of bottom-line profit isn't considered earned income, but rather a return on investment. All members pay tax on their pro-rata shares of bottom-line profit at their respective member's individual marginal income tax rate. Additionally, members can be paid guaranteed payments for actual work performed--and these payments are considered earned income to the recipient.REFERENCE SOURCE:https://www.entrepreneur.com/article/73368 ----------------------------------------------In closing, my goal is to provide you with the best experience possible! Hopefully, the service that I have provided has earned a 5-star rating! Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave today. Thank you in advance. If you require further assistance, use the reply box and let me know.
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