Thanks! Can you please clarify this part: "the contribution reduces taxable income but the conversion increases taxable income with no offset to the self-employment income for QBI purposes"
Does this mean that doing SEP-IRA followed by a conversion will have a joint net effect of zero to the taxable income, but will reduce the QBI benefits? E.g., if I have $100 self-employment income and put $20 in SEP-IRA and convert it to Roth, then I would still have $100 in taxable income. But for the calculation of QBI, only $80 will be considered. This would mean that the process of SEP-IRA followed by Roth conversion is (at least initially) worse than not contributing to SEP-IRA at all and putting the after-tax portion of the income into a regular brokerage. Of course the Roth-converted SEP-IRA will grow tax-free and it might still be beneficial, but I wanted to get a full understanding of the math.
