Self-employed retirement plans under audit?

A report from the Treasury Inspector General for Tax Administration found that the IRS is doing a better job deducting erroneous contributions to retirement plans by self-employed individuals (e.g., there was no self-employment income to support the contributions). When TIGTA check in tax year 2011, 2% of returns claiming contribution deductions didn’t have evidence of self-employment; in 2017 this was down to less than one-half of 1%. Going forward, expect the IRS to check that there is self-employment income and that self-employment tax is factored into the contribution limit for retirement plans. #IdeaoftheDay