I'm in the Income > Self Employed Retirement Plan Contribution section. When I first enter my SEP IRA contribution into the appropriate field and hit continue, my refund amount in the top left corner jumps by the appropriate amount to reflect the deduction from my income caused by the SEP contribution. On the next screen, I enter 0 for "Adjusting Self-Employment Income." On the next screen, when it asks the amount of the contribution attributed to my self employment, i enter the value equal to 100% of the contribution. THEN, when i continue past this onto the next section, my refund jumps back down to the amount it was at before I entered the SEP contribution. whats going on? Do i need to adjust my AGI somewhere else? I am choosing the standard deduction right now, does that affect it?
I suspect that your SEP contribution is correspondingly reducing the amount that is eligible to be claimed as a self-employed health insurance deduction, resulting in no net change in AGI. Compare Schedule 1 Part II with and without the SEP contribution..
How would I check this?
And if that were the case, does that mean that contributing to a traditional SEP is useless, in that its not lowering my taxable income?
Compare Schedule 1 Part II with and without the SEP contribution.
If you do not get a reduction in tax liability from making the SEP-IRA contribution, it might make sense to make a Roth IRA contribution, if eligible. Also, some SEP plans allow Roth contributions.