SEP/IRA contributions

[PChin]

I have a self employed client with no employees.  He will be setting up a SEP tomorrow for the maximum 25%.  I cannot find where to enter this deductible contribution.  Please help.

[PChin]

nevermind - found it

[Just-Lisa-Now-]

The software will compute the max contributions, be aware, its ends up more like 20%, not 25% of net Sch C profit

[dude7707]

WHICH ONE IS CORRECT RE:  MAXIMUM 2022 SEP IRA CONTRIBUTION?

Note:  Same facts as above:  Sole Prop. and No EE's.

$5,424 OR $6,781

Per TD Ameritrade:

Step One: Estimate Earned Income

A – B	=  Estimated Earned Income1
1 + C

A: Estimated Self-Employment Earnings, Minus Estimated Deduction for Contributions to Non-Owner Employees2

B: Estimated Deduction for ½ Self-Employment Tax

C: Contribution Percentage

Step Two: Calculate Estimated Contribution

Estimated Earned Income1   X   Contribution Percentage = Estimated Contribution

Calculation:

Step One: Estimate Earned Income

A – B	=   Estimated Earned Income1
1 + C

A: $29,184

B: $2,062

C: .25

$29,184 - $2,062	=   $21,698
1 + .25

Step Two: Calculate Estimated Contribution

Estimated Earned Income1   X   Contribution Percentage = Estimated Contribution

$21,698 X .25   =   $5,424*

*The maximum contribution for purposes of contributing to a SEP plan for 2022 is the lesser of the result above or $61,000.

ANOTHER CALCULATION:  Don't recall the source:

2022 SEP Calculation:

  Est Net Sch C Income - $29,184

  Less:  1/2 SE Tax               -2,062

    Net                                   27,122

  Allowable Lesser of 25% of Adj Net Sch C - $27,122 or $61k.

  25% of $27,122 = $6,781.

[rbynaker]

$5,424.

[shahinea]

I am self employed what is the maximum I can deduct for sep ira

[Just-Lisa-Now-]

As a tax professional, you should know this, or at least be capable of looking this up.   The SEP IRA contribution worksheet in the program will also compute it for you. 

[qbteachmt]

@shahinea 

"what is the maximum I can deduct for sep ira"

Did you use your public resources? I googled:

max sep ira 2022

and found:

https://www.irs.gov/retirement-plans/plan-participant-employee/sep-contribution-limits-including-gra...

And since the amount can change every year, you need to use the IRS reference materials yourself directly, and specific to each tax year. Do not rely on 15 month old topics on the internet that refer to prior tax years.