Schedule C client with moderate profit--$40,000
An IRA is a higher amount for client than a SEP.
Smart worksheet in Section E: Line 6E: S.E. Retirment deduction connected to business will input a SEP contribution (which lowers the calculation) but it excludes an IRA.
The result with an IRA is a higher QBI dedcution. I've reviewed the regs with no success.
Any input would be appreciated
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Yes, making an IRA contribution will not reduce QBI but a SEP contribution will. So in your situation, the IRA contribution may yield a higher QBI deduction. The final regs reduced QBI by 1/2 Self-employment tax, Self-employed health insurance and Self-employed retirement contributions. More here
https://accountants-community.intuit.com/articles/1798095&src=51247
Yes, making an IRA contribution will not reduce QBI but a SEP contribution will. So in your situation, the IRA contribution may yield a higher QBI deduction. The final regs reduced QBI by 1/2 Self-employment tax, Self-employed health insurance and Self-employed retirement contributions. More here
https://accountants-community.intuit.com/articles/1798095&src=51247
That is the correct computation. A "company" plan such as a SEP or solo 401k will lower the QBI, whereas an IRA contribution will not. I believe this was clarified in the final regs released last month.
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