ColeenD3
Expert Alumni

Retirement tax questions

You forgot to take into account one half of SE tax.

 

Contribution limits for self-employed individuals

You must make a special computation to figure the maximum amount of elective deferrals and non-elective contributions you can make for yourself. When figuring the contribution, compensation is your “earned income,” which is defined as net earnings from self-employment after deducting both:

  • one-half of your self-employment tax, and
  • contributions for yourself.