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r/taxhelp • … • u/BlueArcherX

SEP/IRA Conflict

In March 2021, my wife started her own business. We already had ongoing traditional and Roth IRA contributions set up on her Betterment account. In October I saw that Betterment had a SEP IRA that I could set up for her so I did that and set up a small automatic deposit.

Total contributions for 2021

* Traditional: 4200 * Roth: 225 * SEP: 225

I am sure you can see where this is going, but per TaxAct, the SEP appears to have broken the fact that we can take a deduction for all the money that was contributed to the traditional IRA in 2021 since she was suddenly "covered by a qualified retirement plan" (the SEP)

Is there any way I can fix this?

EDIT: I don't know if it matters but her business is a side gig and only had about $1500 revenue but she also had about $20K in non-employee contractor income that was paid to her and not her business.

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