How does one calculate the amount he could contribute to a Roth when the contributor's gross earned income was $3,000 and he had $1,000 in expenses for a "net" earned income of $2,000? This is the case with a high school student who had a business mowing lawns and could take the deductions but wants to maximize his Roth contribution for 2010. Could he contribute $3,000? Pub 590 says; What 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 (provided your personal services are a material income-producing factor) reduced by the total of: • The deduction for contributions made on your behalf to retirement plans, and • The deduction allowed for one-half of your self-employment taxes. Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. but doesn't differentiate between "taxable compensation" as pre or post deductions etc.