SEP IRA Contributions

Forum|Forum|5 years ago
March 13, 2021
2 replies
14 views

In June 2020, I left employment as a statutory employee, where I made some income as W2 wages and some as 1099 income (I was a financial advisor/career agent for a mutual life insurance company). Up until that time, I had access to a 401k, where I made contributions. When I left, I became 100% self-employed, with no access to a 401k. I made $6,000 in SEP IRA contributions for the rest of 2020.

When I input this into Turbotax, it's saying my contribution is not deductible because my MAGI was too high. It seems to be treating the contribution as if it's going into a traditional IRA, not a SEP IRA. Is there a workaround to this, as I'm also planning to make some additional SEP IRA contributions this month that would also go towards 2020. Thanks for your guidance.

Best answer by dmertz

Do not enter SEP contributions under Deductions & Credits. Remove the entry you made there. Enter SEP contributions under income under Business Items -> Business Deductions and Credits -> Self-employed retirement plans.

dmertzAnswer

Level 15

Onefish

Level 5

I followed this exact path but TT shows a deduction for the full amount of my Sch C taxable income. It does not limit the deduction to 25%. I'm using the TT 2020 desktop Deluxe version.

dmertz

Level 15

Onefish, I would suggest deleting the Keogh, SEP and SIMPLE Contribution Worksheet to remove all of your previous entries regarding this contribution and revisiting the self-employed retirement contribution section. It seems that you could have previously made an extraneous entry there.

Tax_Dale

Level 2

A statuatory employee is not Self Employed, eventhough a statuatory employee can deduct expenses related to their income. Could that be part of the issue? When you say 100% self-employed do you mean you had a Schedule C for Self Employed income? Or for Statuatory income? Statuatory Income and Expense on a Schedule C is not Self Employed income.