Why did Ryan report the phantom income

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Reference no: EM132768852

Question - Ryan had just finished a finance class and had learned about the importance time value of money. With this knowledge, he wanted to start saving for retirement. Last year Ryan had a job and earned $2,000. After paying his expenses, he placed the remaining $500 in a savings account in the bank. This year, however, Ryan decided to focus on his studies, so he did not earn any income. He paid his living expenses through student loans. At the end of the current year, Ryan contributed $400 to a Roth IRA. On his tax return for the year, Ryan reported $400 of self-employment income (even though he didn't earn any).

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Why did Ryan report the "phantom" income?

What do you think of his strategy?

Reference no: EM132768852

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