My spouse is self-employed and the only employee in the business. The allowed maximum SEP-IRA contribution is approximately $3000. I arrived at this number two different ways: 1) IRS Pub. 560 worksheet, and 2) by allowing Turbo Tax to “maximize” the SEP-IRA contribution. Both methods yield the same amount, so I feel pretty sure it is correct. The problem is when I enter this value in to the Business Income & Expenses page in TurboTax the Fed & State taxes increase?! In other words, if I leave the cell blank or enter $0 we owe a smaller amount of taxes. Is this a bug in the software or am I missing something?
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Answered in the comments. In this particular case, due to filing status and AGI, a separate traditional IRA contribution becomes nondeductible when the SEP-IRA contribution is entered indicating that the individual is covered by a workplace retirement plan.
Answered in the comments. In this particular case, due to filing status and AGI, a separate traditional IRA contribution becomes nondeductible when the SEP-IRA contribution is entered indicating that the individual is covered by a workplace retirement plan.
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