There is no glitch in TurboTax. An IRA will not reduce your daughter’s federal tax due because your daughter owes no federal income tax. She owes self-employment tax because no Social Security or Medicare tax was withheld from her pay.
Her standard deduction of up to $12,550 is larger than her income so she has no federal tax liability.
You can reduce her self-employment tax by adding business expenses and reducing the amount of net profit.
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