Correct ... too good to be true ... you cannot take both. See the info below on the retirement plan contribution limits and the worksheet for the SEHI deduction ...
Plan compensation for a self-employed individual
To calculate your plan compensation, you reduce your net earnings from self-employment by:
- the deductible portion of your SE tax from your Form 1040 return, Schedule 1, on the line for deductible part of self-employment tax, and
- the amount of your own (not your employees’) retirement plan contribution from your Form 1040 return, Schedule 1, on the line for self-employed SEP, SIMPLE, and qualified plans.
You use your plan compensation to calculate the amount of your own contribution/deduction. Note that your plan compensation and the amount of your own plan contribution/deduction depend on each other - to compute one, you need the other (this is a circular calculation). One way to do this is to use a reduced plan contribution rate. You can use the Table and Worksheets for the Self-Employed (Publication 560) to find the reduced plan contribution rate to calculate the plan contribution and deduction for yourself.
See line 9 ...
https://www.irs.gov/pub/irs-dft/p535--dft.pdf
