contributing to a Sep IRA

[mickey]

I have a new client who runs an S Corp.  Year 2021 is my first year with him.

He asked me to work up a scenario to see how much he should contribute to his SEP IRA for himself and his employee.  I looked at the books and saw that in Sept of 2021, he made a contribution to the retirement account as this is when he usually contributes, before the corporate taxes are filed by 9/15.

So, I believe the amount I'm seeing on his Quickbooks is for the 2020 contribution.  It doesn't quite match up with what the previous accountant reported.   It's off a little.  

1.  My first question is, how to report the SEP contribution made in 2021 (as recorded in Quickbooks) for the 2020 tax year, on the current 2021 tax returns?  Do I add it in as an adjustment somewhere and then calculate the 2021 contributions (see question #2)?

2.  Second question, he asked how much he should contribute for 2021, i.e. he wants me to compute a couple of scenarios to see how his K-1 net income can be affected by different contribution amts.  Does anyone know of an easy way to do this?  And what documents do I need to have in front of me to do this? 

Thank you!!

[sjrcpa · Accepted solution]

1. You don't. It was deducted on the 2020 return and shown as a payable on the 12/31/20 Balance Sheet.

2. You need the SEP Document (for the eligibility criteria), the W-2s, Employee Census (age, date of hire, date of termination, hours worked). Put it in a spreadsheet. The contribution can be zero - 25% of eligible wages.

[qbteachmt]

"I believe the amount I'm seeing on his Quickbooks is for the 2020 contribution."

If it's off by a little, did you confirm it isn't exactly what was supposed to be paid in for the year before that?