Does Sec 199A 20% reduction in taxes affect IRA limits
20% in certain types of self employed income (such as engineering consulting) is not taxable under current tax law.
Does this reduce self employed income for IRA limits by 20% ?
Example, age 66, only earned income is $7,500 in self employed engineering consulting. Is my traditional IRA contribution limit $6,000 or $7,000 ?
Are SEP IRA contributions calculated on $7,500 or $6,000 ?
Thanks !
Permalink Submitted by Alan - IRA critic on Fri, 2019-10-11 13:43
The deduction does not reduce your SEP IRA or other IRA contribution. It just reduces your income tax.
Permalink Submitted by David Mertz on Fri, 2019-10-11 14:23
However, amounts that you contribute to a self-employed retirement plan reduce the amount of self-employment income on which the QBI deduction is calculated (but do not reduce the amount of self-employment income on which self-employment taxes are calculated).