I am self employed. Turbo tax, in determining my Earned Income for the purposes of calculating the upper limit for a yearly contribution for a Roth IRA, uses the following algorithim:
Schedule C line 31 "Net Profit" - 1/2 Self Employment Tax.
I am wondering if this is the correct calculation... why is 1/2 Self Employment tax subtracted from Net Profit?
Isn't Net Profit = Earned Income?
I posed the question to both Copilot and Gemni AIs and both, while acknowledging that deducting 1/2 the employment tax is appropriate for the Earned Income Credit calculation, it should not be included in the calculation of Earned Income for the purposes of the limit of a Roth IRA contribution. Is this an issue with the Turbo Tax programming?
Thanks in advance.
