The Sec. 199A deduction--the 20% deduction you reference--should save you big on your taxes. But it's more complicated that your post describes. Here's the blog post I did back when law passed that goes into key details:
https://evergreensmallbusiness.com/pass-thru-income-deduction-dozen-things-every-business-owner-must-know/
But note that it's your taxable income that needs to be below $157,500 (if you're single) in order to get the deduction. That means that you can probably make quite a bit more than $157,500 if you have deductions, use a pension, take the self-employed health insurance deduction, etc
I read your informative blog post and have a question.
How does the Sec. 199A deduction affect solo/individual Roth 401(k) contribution limits, if at all?
Specifically, if I take the Sec. 199A deduction, I save on tax, but does it also reduce how much I can put into a Roth 401(k)?
For example, say I had (five-figure W-2 wages and) $18,000 of self-employment business income on my 1040 for 2017.
Then my self-employment tax deduction would be $1,272, so my earned income from self-employment would be $16,728.
Hence, in that scenario, I could contribute up to $16,728 to my solo/individual Roth 401(k); I'd also pay $2,543 in SE tax, plus whatever my usual federal and state taxes would be.
Now, again hypothetically, say those income figures occur for 2018.
Would I still be able to contribute up to $16,728 to a solo/individual Roth 401(k) if I wanted to?
Or, would the Sec. 199A deduction, while reducing my federal and state taxes, also lower my maximum retirement contribution threshold?
