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Retirement tax questions
@dmertz Self-employment tax is calculated based upon net income, and other expenses such as fuel for my business vehicle (a deduction) lower net income for self-employment tax purposes. Elective deferrals also lower my net income. Why would a profit sharing contribution not lower my net income for self-employment tax calculation purposes? The contribution is exactly the same as the elective deferral in the sense that both contributions are taxed the same way upon distribution in retirement. I'm trying to wrap my head around why the profit sharing portion is treated any differently.
‎January 23, 2021
7:54 AM