Thanks @dmertz @AliciaP1 for your answers. Here is what is happening in a bit more detail. We both have put $6000 each in our Traditional IRA's ($12,000 total). I entered this info in the "Personal-Deductions & Credits". After doing this when I add the max contributions for SEP IRA it only reduces the taxes by $60 as my wife's traditional IRA contribution is now getting classified as "Nondeductible IRA" and form 8606 is generated. If I answer NO to "Is (my wife) covered by a retirement plan at work?", then we get the full $12000 IRA deduction and also the SEP IRA reduction. It is coming down to answering just this one question and I am not sure how to answer it. My wife does not have any other job. She does not have any other 401k/SEP IRA except a Traditional IRA. How do we answer this question "Is (my wife) covered by a retirement plan at work?" if she opens a new Solo 401k or a SEP IRA?
