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So sorry, I did not explain the SEP mix-up clearly. It isn't both...it is not a SEP. It is a traditional IRA contribution only. Contribution mistakenly categorized as a SEP contribution and entered on the proseries tax year 2021 SEP worksheet as SEP contribution for the Schedule C. Because there was no self-employment income after expenses on the Schedule C, it did not appear anywhere on the 2021 1040. total $6,500 was to be withdrawn so no action taken to treat it as excess on the return. Diagnostic said "no self-employment income for pension plan...contribution deduction will not calculate until self-employment income is present....treat as excess contribution to a SEP."
Since the tax filing due date for the 2021 1040 of 10/15/22 has already expired, taxpayer can no longer withdraw contribution before that date and avoid penalty. Hence the question: shouldn't it be reported on 2021 1040X and 6% penalty paid.
Carryover: Because excess was not withdrawn in 2021, it carried over to the 2022 1040. If it can be deducted on the 2022 return, will the 6% penalty for 2022 apply?
Will continue to research. I've not run into IRA or SEP excess contribution issue...hence the request for critique and input.