The tax court ruled that retirement payments made by self-employed business owners for themselves cannot be claimed as a deduction on Schedule C in order to reduce self employment tax (the business owners’ Social Security and Medicare).
It is deducted from adjusted gross income on Form 1040 in order to reduce regular income taxes.
Contributions for the business owner’s employees and the costs of running the plan may be deducted on the Schedule C and will reduce both income and self-employment taxes.
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