This is the first year we have someone with a 1099 job, I was looking into funding a SEP IRA before April 15th, as we did not pay enough estimated taxes this year. I put in a “dummy” number of $2500 in turbo tax. it lowered my AGI by a ton more, from 152 to 139. I can’t figure out the drastic change. we have one dependent and did collect unemployment this year. it is a mess. would anyone have any advice on were to look to figure this out. i am definitely funding the ira if this is how it works. i just can’t see how this one change totally lowers it so much.
Many Thanks!
Hi @midcitybeth:
Two things at play! You likely got the the Qualified Business Income Deduction which can essentially amplify things like SEP IRAs on your schedule C:
https://www.nerdwallet.com/blog/taxes/pass-through-income-tax-deduction/#:~:text=The%20qualified%20business%20income%20deduction%20(QBI)%20is%20a%20tax%20deduction,for%20joint%20filers%20to%20qualify.
Also, question, did you mark the UI as UI income (i.e. upload a 1099-G)? Some calculators have adjusted for the fact that the first $10K of the the UI income is now tax-free.
That does seem like an outsized effect. Nothing else changed?
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no, and when i tooled around more with the projected sep contribution to putting us right at 150100 agi, it did not have that huge drop. I am guess turbo tax has caught up with the UI income being tax free. we received just under 10k. so even though they said to wait to file…maybe they incorporated it recently. thank you for the schedule C info, I will read that next!
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