windy-r
New Member

Making a SEP account contribution is not affecting my total tax owed.

If I put 0 or the maximum allowable, my federal tax due is not changing. Why would this be?
ChristinaS
New Member

Retirement tax questions

The SEP deduction lowers yours Adjusted Gross Income. However, the SEP deduction does not lower your net income from self-employment on Schedule C. As a result, it does not reduce your self-employment tax of c 15%.

If the contribution is not reducing your tax liability at all, that means your "regular" tax rate is already 0%. You owe self-employment tax on your net income even if your "regular tax" is $0.

You might want to look at your 1040- pay close attention to the amounts on lines 56 (regular net tax) and 57 (SE tax).

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