IRS allows SEP deduction when W2 says retirement plan. But can't so this in TurboTax!

Forum|Forum|6 years ago
July 16, 2020
6 replies
55 views

Hi,

Thanks for looking at my question!

I've had a self-directed SEP-IRA, and Individual 401k, as well as my regular qualified plans. I am a consultant who works as a 1099 or at companies without retirement plans.

My tax accountant friends say that the IRS will still allow deductions if a have a W2 stating "retirement plan". I joined a consulting company in Sept 2019 and they now let me contribute to a 401k.

Using TurboTax, I expected there was a way to say "contribute to SEP/indiv 401k with retirement plan at new company" or something. But it won't allow that. It says IRS rules won't allow any SEP deductions even if I joint a retirement plan company on Dec 30th.

I had to file an extension, and deposit into my SEP account anyway, in case I missed the filing window.

Please clarify.

Thanks,

P.S. I used to use Self-Employed version last year, but I was looking at the Deluxe version when it said I couldn't do it. Will Self-Employed make it work?

SusanY1

Alumni - Intuit

It sounds like you may be entering your SEP contribution in the section in TurboTax for Traditional IRAs OR that you haven't yet entered your income and expenses for TurboTax to determine the allowable amount of a SEP contribution.

SEP-IRA contributions are entered in TurboTax after the net profit for the self-employment income is entered in the section "Other Business Situations" (online) or Less Common Business Situations (desktop/installed) and then "Self-employed Retirement."

Please note that by filing your extension, you also extended the time to make this contribution. Therefore, if you determine that a larger contribution would be beneficial you have until October 15, 2020 to make it. You can even file the return with the contribution amount you expect to make by October 15, 2020 to get in motion a refund (if applicable) and use the refund to fund the contribution.

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agent46575Author

Level 2

So then I need a different version online than the Deluxe? The "Self Employed" version?

Tnx,

VolvoGirl

Level 15

Yes you need the Online Self Employed version or any of the Desktop CD/Download programs. All the Desktop programs have the same forms. You just get more help and guidance in the higher versions.