Message Font: Serif | Sans-Serif
No. of Recommendations: 0
See if this helps. Just take your net income from self-employment, subtract your deduction for 1/2 of the Self-employment tax, and multiply that by 20%.

Suppose you had $50,000 in net income, and you had a $6000 deduction for the SE tax. Subtract $3,000 (1/2 your deduction for the SE tax) from $50,000, and you get $47,000. Take 20% of that, and you get $9,400. That would be your Keogh contribution. You should get to the same number by walking through the IRS's procedure, but doing it that way it is very hard to see what is really going on. Perhaps someday the tax programs will address this problem. Every time I discover an overlooked business deduction that lowers my net income, I have to manually re-calculate the Keogh contribution. And, you don't want to over-contribute.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.