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TT Failed to Flag that my wife's Trad. IRA Contr. Exceeded Maximum Allowed Because New SEP Was Considered Work Plan and MAGI was too high
Tax Status: Married filing jointly. I want to know where TT would indicate that my wife's traditional IRA contribution exceeded the income limits because I received no warning from the software. I opened a SEP for my wife this year because she had significant 1099 income. Additionally, I learned that you can contribute to both a traditional IRA and SEP. I did both to limit our tax burden. I used TT's recommended SEP calculation and we both contributed that maximum to our traditional IRA's. The mistake that TT failed to catch (or I missed) is that the SEP is considered a work retirement plan so there is a modified gross income limit of $109,000 or less. We exceeded that limit, so the IRS assessed us for the non-qualified contribution. Why didn't the system indicate/flag this somewhere, or where did I miss it in the workflow? Many thanks.