Calculation of self employment income for IRA contribution deduction limit

Does self employed health insurance deduction (Schedule 1, line 17) reduce the self employment income amount used to determine whether a contribution to a traditional IRA is tax deductible?

IRS publication 590-A says that for if you are self-employed, compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: (1) The deduction for contributions made on your behalf to retirement plans, and (2) The deduction allowed for the deductible part of your self-employment taxes. It does not mention the deduction allowed for self employed health insurance premiums.

The income used for QBI deduction is reduced by the self employed health insurance deduction.
Similarly MAGI medicare IRMAA is reduced by the self employed health insurance deduciton.

Thoughts? Is the income used for IRA deduction limits reduced by Schedule 1 line 17 amount for self employed health insurance?



While IRA compensation and QBI are both based on self-employed earned income. They are distinct calculations. Don’t try to read something into the IRA Compensation calculation that is not there.



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