I have income only from a sole proprietorship. According to IRS rules, if I have no retirement plan at work, then I can make a fully deductible Traditional IRA contribution based this income up to the standard deduction limits for 2023 without any reduction based on AGI limits. However, TurboTax Home and Business Step-By-Step does not seem to take this into account, and still uses my AGI to automatically reduce my deduction.
Is this a problem with TurboTax? Do I need to bypass Step-By-Step and enter information directly on the forms? Or am I misinterpreting IRS rules?
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Yes, a sole proprietor with no retirement plan, you can make IRA deductions provided the business has the income to support it. The program should give you the full deduction unless you have marked a retirement plan available somewhere in the program. Check through the forms to be sure an errant mark did not appear. To see your forms:
See Retirement Plans as you may want to add another retirement plan. You qualify for more options with higher limits and many can be opened until April 15 for last year, just like the traditional IRA.
You mention having a Traditional IRA. A traditional IRA will reduce your taxable income as opposed to a ROTH.
Yes, a sole proprietor with no retirement plan, you can make IRA deductions provided the business has the income to support it. The program should give you the full deduction unless you have marked a retirement plan available somewhere in the program. Check through the forms to be sure an errant mark did not appear. To see your forms:
See Retirement Plans as you may want to add another retirement plan. You qualify for more options with higher limits and many can be opened until April 15 for last year, just like the traditional IRA.
You mention having a Traditional IRA. A traditional IRA will reduce your taxable income as opposed to a ROTH.
AmyC, thanks so very much for your incredibly fast response. Indeed, the Retirement Plan at Work box was checked on the IRA Contributions Worksheet, and I was able to figure out why.
Again, thanks for being so helpful on this very vexing problem.
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