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Returning Member
posted Oct 3, 2020 9:30:40 PM

Business file schedule C and used cash method, how to treat sep ira?

2019 tax return was extended to 10/15/2020. 

Made a SEP IRA contribution for 2019 tax year on 9/2/2020. 

 

However, the business used cash method. Is it okay  to put the SEP IRA contribution on 9/2/2020 for the 2019 tax return?

 

Main concern is that the business used cash method instead of accrual method. 

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1 Replies
Not applicable
Oct 3, 2020 10:58:59 PM

for a SEP IRA the contribution must be made by the due date of the return including extension.  so you should be deducting the 2020 contribution for 2019 on your 2019 return. There is no issue because the business uses the cash basis. Your situation is common.