dmertz
Level 15
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Retirement tax questions

Yes, this calculation of net earnings is correct.  See "Earned Income" on page 6 of IRS Pub 560.

 

The deductible portion of SE tax is subtracted because this is the equivalent of the employer portion of Social Security and Medicare taxes which is effectively an expense of the employer, so it must be subtracted from net profit to determine net earnings.

 

AIs are notorious for producing incorrect answers to questions of law, particularly those related to retirement accounts, as is demonstrated by the incorrect answers you received from the Copilot and Gemini AIs.

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