Should a SEP IRA contribution reduce the amount of tax you owe by lowering your self employed income?
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Should a SEP IRA contribution reduce the amount of tax you owe by lowering your self employed income?

 
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Level 9

Should a SEP IRA contribution reduce the amount of tax you owe by lowering your self employed income?

A SEP IRA contribution does NOT lower your self employed income.  It does, however, lower your modified adjusted gross income.which is used to determine eligibility for many tax benefits.  It should, in most cases, result in a lower your tax liability, but once you change your MAGI, a lot of other items are re-calculated, particular for those in higher income brackets, that it would be very difficult to quantify the tax benefit without recalculating the entire return.
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