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My client has an increase in Sch C income for 2020. It appears that a SEP IRA contribution will help reduce tax due......
What is the "maximizing" the contribution option do and is there any reason not to maximize?
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It means the software will calculate the maximum allowed deduction.
Reason not to- client can't pay that much or doesn't want to.
The more I know the more I don’t know.
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Does the client have employees? If so, they will also have to contribute at the corresponding contribution rate for employees that qualify - at least 21yo, worked at least three of the five years for the business and received at least $600 in 2020.
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If the return changes and it affects that qualification while you are working, it avoids over-contribution and avoids excess tax. Or, you hardcode how much they want to contribute.
"is there any reason not to maximize?"
When the client can't afford it.
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