topic ROTH contribution limit, self-employed in Retirement tax questions

ROTH contribution limit, self-employed

iwaldner — Sun, 08 Mar 2020 23:46:31 GMT

My only earned income is from the profit of my self-employment. What counts as the profit for this purpose: Schedule C line E5 ("allowable Sch C profit") minus E6b ("1/2 self employment tax deduction") ?

or Schedule C line E5 ("allowable Sch C profit") minus E6b (1/2 self employment tax deduction) minus 6a ("Self employed health insurance") ?

Turbo tax seems to think it's the first option. Is that correct?

Re: ROTH contribution limit, self-employed

Irene2805 — Mon, 09 Mar 2020 00:16:59 GMT

Yes - TurboTax is correct. Self-employed health insurance is not part of the calculation. A self-employed individual's eligible compensation is determined after the deductions for:

SE tax; and
the self-employed individual's deductible plan contribution.

For additional information and worksheets, please see IRS Pub. 560 - Retirement Plans for Small Business