According to Turbo Tax, I owe $1775 in taxes. I en...
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taxmoney777back
New Member

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?

It says I have an $888 deduction on my self employment tax but it still shows I owe $1775. My taxable income is 0.
3 Replies
Anonymous
Not applicable

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?

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. 

fanfare
Level 15

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?

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

Hal_Al
Level 15

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?

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.

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