The SEP-IRA contribution of a sole proprietor does not reduce self-employment taxes. However, any deduction for a self-employed retirement contribution does reduce the amount of QBI on which the QBI deduction is calculated. As far as I know, it would be better if the SEP contribution could be made directly as a Roth contribution since it that case it would not reduce the QBI deduction the way a deductible traditional SEP contribution would.
I wonder, though, if it's correct that TurboTax does not reduce by the amount of the Roth SEP contribution the income on which the QBI deduction is calculated. If the business made a Roth SEP contribution for a non-owner employee, the business would treat that as a business expense the same as a traditional SEP contribution that would reduce the net profit of the business, reducing the QBI, so why would in not make sense to reduce QBI by the amount of a Roth SEP contribution made for the sole proprietor.
