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Hi fellow tax-toilers,

we are doing our own taxes for the first time since we've had Keough accounts. We are both self employed & unincorporated.

I downloaded IRS pub. 560 from their website, and if anyone is knowledgeable about this topic, I would appreciate your insight. On page 18 of pub 560, I see the
"Deduction Worksheet for Self-Employed"

The example above the 'worksheet' says: "You are sole proprietor and have employees".

My question is: does anyone know if this formula still applies to me if I am self employed, the sole proprietor of my business AND I am the ONLY employee? (bolded just so you can find the point of this long msg)

The formula:Step 1: enter your rate from the 'Rate Table' ....(since my plan contribution amt is 20% of net earnings, my 'rate' is .166667.)

Step 2: enter your net earnings (net profit) from line 31, sched. C, form 1040. (I did this)

Step 3: Enter your deduction for self-employment tax from line 27, form 1040. (I did this)

Step 4: Subtract step three from step 2 and enter result. (Did it)

Step 5: Multiply step 4 by step 1 = (did it)

Step 6: multiply $160,000. by your plan contribution rate. enter the result, but not more than $30,000.

Step 7: Enter the smaller of step 5 or step 6. This is your MAXIMUM DEDUCTIBLE CONTRIBUTION. Enter deduction on line 20, Form 1040.

Thanks in advance for any assistance on this question!

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