SEP-IRA and Adjustments to Income

Forum|Forum|5 years ago
March 8, 2021
1 reply
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I've entered an amount as a SEP-IRA contribution but this amount does not show up on Schedule 1 line 15. In other words, I am not getting any immediate tax benefit from my 2020 contribution because it is not increasing my adjustments to income.

TurboTax Self Employed Online

KathrynG3

Level 14

To explain why the SEP-IRA contribution amount is not showing on Schedule 1 Line 15, be sure you are meeting the requirements and within the allowable limits.

For more information, see IRS: SEP Plan FAQs - Contributions which states in part:

The most you can deduct on your business’s tax return for contributions to your employees’ SEP-IRAs is the lesser of your contributions or 25% of compensation.

Compensation considered for each employee is limited and subject to annual cost-of-living adjustments).

If you are self-employed and contribute to your own SEP-IRA, there is a special computation to figure the maximum deduction.

For more information, see: Where do I enter my SEP IRA contributions?

charsmith20Author

Level 2

Thanks Kathryn. I've double checked the SEP contribution calculation and I am below the 20% max ($7,000 contribution against $36,700 business income as seen on Schedule 1 line 3). In TurboTax, line 15 on Schedule 1 shows "$0" although I have input the $7,000 contribution in the program.

Is there a glitch in TurboTax or am I misunderstanding how SEP contributions work?

dmertz

Level 15

Perhaps you've mistakenly entered the SEP contribution under Deductions & Credits as a regular traditional IRA contribution. Make sure that you have entered it under Wages & Income -> Business Items -> Business Deductions and Credits -> Self-employed retirement plans.