Can you deduct IRA Contributions AND Claim the Credit for Qualified Retirement Savings Contributions?

I am a 1099 Contractor, and make roughly 22,000/year and Single. I am wondering, if I contribute say $3,000 to a Traditional IRA, can I use the $3,000 as an adjustment to AGI (Line 32, Form 1040), AND claim the 10% credit of $300 against the Tax Liability?

Public Comments

1. Yes on both fronts.
2. The idea is correct but some details are incorrect. If your net earnings from self-employment are $22K and you contribute $3K to a deductible IRA, based on your income, you are eligible for a credit of 10% of the first $2,000 you contribute. So you will get the adjustment of $3,000 plus a credit of $200 against your income tax. The credit is against only income tax, not self-employment tax. If you boost your contribution to $4,000, your credit increases to 20% of the first $2,000, or $400. The extra $1,000 contribution results in at least a $300 additional reduction in taxes.