TurboTax properly implements the Deduction Worksheet for Self-employed from IRS Pub 560 on its Keogh, SEP and SIMPLE Contribution Worksheet.
Did you enter an $8,000 elective deferral to an individual 401(k) that you failed to remove and TurboTax is able to apply only the remainder of any net earnings as the SEP contribution? Review the Keogh, SEP and SIMPLE Contribution Worksheet.
Delete your wife's Keogh, SEP and SIMPLE Contribution Worksheet, then revisit the self-employed retirement section, marking only the Maximize box for her SEP contribution.
