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Get your taxes done using TurboTax
No, only the portions you contribute for your employees are an adjustment to the Self-Employment tax. Your portion only reduces income tax.
- For a self-employed person contributing to his or her own SEP-IRA, contributions are deducted as an adjustment to income on Form 1040 line 28. SEP contributions reduce a person's adjusted gross income, reduce taxable income, and thereby reduce the federal income tax. SEP IRAs do not impact the calculation of the self-employment tax since the self-employment tax is calculated before SEP contributions are calculated. A self-employed person reduces income tax only by contributing to his or her own SEP-IRA.
- A self-employed person who contributes to SEP IRAs for his or her employees boosts business expenses. This lowers net profit, reducing both the self-employment tax and the income tax.
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‎February 26, 2020
9:51 AM