topic According to Turbo Tax, I owe $1775 in taxes. I entered the amount of $2000 contributed to my IRA fund and it didn't change the amount owed. Is this right? in Get your taxes done using TurboTax

According to Turbo Tax, I owe $1775 in taxes. I entered the amount of $2000 contributed to my IRA fund and it didn't change the amount owed. Is this right?

taxmoney777back — Fri, 26 Jun 2020 04:16:39 GMT

It says I have an $888 deduction on my self employment tax but it still shows I owe $1775. My taxable income is 0.

Re: According to Turbo Tax, I owe $1775 in taxes. I entered the amount of $2000 contributed to my IRA fund and it didn't change the amount owed. Is this right?

Anonymous — Fri, 26 Jun 2020 06:32:37 GMT

the $1775 in taxes is evidently self-employment taxes which can not be eliminated by contributing to an IRA. the only way to reduce the SE tax is to reduce your self-employment income (schedule C) or from a partnership.

Re: According to Turbo Tax, I owe $1775 in taxes. I entered the amount of $2000 contributed to my IRA fund and it didn't change the amount owed. Is this right?

fanfare — Fri, 26 Jun 2020 12:23:51 GMT

with no earned income after expenses you can't contribute to an IRA so you would have an excess contribution.

Re: According to Turbo Tax, I owe $1775 in taxes. I entered the amount of $2000 contributed to my IRA fund and it didn't change the amount owed. Is this right?

Hal_Al — Fri, 26 Jun 2020 13:12:16 GMT

Having zero taxable income does not mean poster has no earned income. The fact that he has self employment tax (SET) means he did have earned income and his IRA contribution is allowed.

$1775 of SET would indicate about $12,600 of net profit. The half SET deduction plus the standard deduction would explain the 0 taxable income.

Poster might want to consider recharacterizing the traditional IRA contribution to a Roth contribution. or just undoing it.