Compensation is the salary or wages you receive as an employee. If you are self-employed, compensation is your net income for personal services performed for the business.
All taxable alimony is considered compensation.
Interest, dividends, and most rental income are passive income and are not considered compensation. Deductibility of your contribution is based on whether or not you or your spouse are an active participant in an employer-maintained retirement plan. If you are single and not an active participant, you are eligible for a full deduction no matter how large your income. If you are an active participant, the deductible amount is dependent on your MAGI and income tax-filing status. You may be eligible for the maximum deduction, a partial deduction, or no deduction.