AnmarieA
Level 5
06-18-2022
12:08 AM
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The Employer contributed $625.00 in excess SEP Contributions in 2021 which the max is 25% of W2 wages. Can the excess be used to reduce the 2022 contribution or does it need to be reported in the personal return. The Company return will only deduct the amount allowed and the excess should not be deducted. Since the amount is minor how can the error be corrected?
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TaxGuyBill
Level 15
06-18-2022
10:01 AM
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I think this shows what should be done:
But I do think you are allowed to essentially carry it over and contribute less the next year, and pay the penalty on the current year for over contribution.
TaxGuyBill
Level 15
06-18-2022
10:10 AM
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Yep, I just found that you can carry it over, and pay the penalty.
https://www.irs.gov/publications/p560#en_US_2021_publink10008842
