IRA BEFORE TAX CONTRIBUTION AND SELF EMPLOYED HEALTH CARE DEDUCTION ISSUES

Forum|Forum|3 years ago
March 18, 2023
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Let's say I have $3k in net business income, and $250 in deductible employment tax. My Home and business program is allowing me to contribute $2750 before tax to an IRA, and also allowing me to claim a self employed health care deduction of $2750. Both end up showing up on Schedule 1, Part 2, adjustments to income.

Is this correct? (Actual health care expenses are about $8k.)

ErnieS0

Yes. TurboTax is correct. For 2022, 2021, 2020, and 2019, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

$6,000 ($7,000 if you're age 50 or older), or
If less, your taxable compensation for the year

The self-employed health insurance deduction does not reduce your net self-employment income because it is an adjustment to income that is subtracted further down on the form.

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Ron13535Author

Thanks for the quick reply Ernie,

I guess what you are saying is that neither of these items are considered business expenses, but rather, they are adjustments to income, which is different, right?