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Do you only have self employment income? Is the net profit enough?
For an IRA contribution. If you only have self-employment income you can only contribute up to your net profit reduced by the deduction allowed for one-half of your self-employment taxes. See IRS publication 590 http://www.irs.gov/pub/irs-pdf/p590a.pdf
So check 1040 Schedule 1 line 27. You have to deduct that amount from your Schedule C Net Profit. That will give you the allowed contribution for the 1099Misc income.
@TheBardog - Please keep your questions in one thread - Repeating the same questions just confuses everyone.
How much you can contribute is NOT based on earned income, it is "taxable compensation" as defined in IRS Pub 590A: https://www.irs.gov/publications/p590a#en_US_2019_publink1000230355
Which is basically the amount of the net earned income minus half the SE tax that is taxable after all deductions.
I understand this and I am still able to contribute the maximum amount of 6000.
The issue is not how much I have contributed. The issue is that TurboTax thinks my earned income is zero even though it has the correct amount listed under income. I've attached the message below.
Please give me an example if possible of what amount of earned income would not be able to contribute 6000 to a SEP IRA.
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Hi VolvoGirl.
Correct, only Self Employment income.
Now in regards to going to line numbers on the 1040 and deducting from Schedule C it's getting a bit confusing. I am using the online version of TurboTax so Im just answering the questions as I go along. I only contribute the 6000 and my earned income minus self employment tax is still well over 6000.
Please refer to your other question:
A SEP is NOT a Traditional IRA and is NOT entered in the IRA section at all.
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