A SEP IRA is not the same as a Traditional IRA, in that a SEP contribution should be entered as a business expense.
Here is more information on how to enter your SEP contribution in TurboTax, Where do I enter my SEP IRA contributions?
Note that you will need to enter your SEP contribution information after you have entered your business income information.
Once you have entered your SEP contribution, TurboTax will alert you about the excess contribution, as well as the total to withdraw.
The next step is to report the distribution for this excess contribution using a mock Form 1099-R. This will be reported as personal income.
- Go to Wages & Income, Retirement Plans and Social Security (1099-R), then Start
- Enter your 1099-R details, with the gross distribution in Box 1 and the earnings in Box 2a
- Select Code 8 for Box 7
- Check the IRA/SIMPLE/SEP box
- Where is your distribution from?, Select last circle "Pension...None of the above", then Continue
- Check the, "This is for a SEP IRA" box, then Continue
- Enter information about the value of your IRA, then Continue
When your Form 1099-R arrives in 2026, it should be coded with a P in Box 7, which will reflect the above and you will not need to report it.
Learn more by reading, SEP plan Fix-it Guide - Contributions to the SEP-IRA exceeded the maximum legal limits
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