SEP contribution - how does the IRS know?

[squidlady]

I have always wondered about something. TT asks if you have contributed to a SEP IRA. I do this every year. I figure (but do not file) my taxes, then send a payment to my IRA (because I do not know the amount I am allowed to contribute until I do my taxes), and then when that check clears and the payment is received (by the IRA bank) then I file my taxes. I am wondering if the IRS checks to make sure that the IRA payment has cleared? Does this make sense? In other words, does the IRS check to make sure that the IRA payments people claim to make, are actually made? (I would imagine so). Thank you.

[KittyM · Accepted solution]

Every year, the custodian of your SEP IRA is required to send you - and the IRS - a copy of Form 5498 IRA Contribution Information.  For your information, a link to the form is below:

https://www.irs.gov/pub/irs-pdf/f5498.pdf

[squidlady]

Thank you - I was really wondering if the IRS checked the IRA contribution DURING their tax return review process. I wanted to know if I could file my return BEFORE the bank cleared the check for the IRA deposit, if that would mess up anything regarding my return. Thank you again.

[KittyM]

You have until the due date of your return (including extensions) to make your SEP IRA deposit.  Lots of people file to get their refund and then use it as part of their IRA contribution for the tax year in question.

[squidlady]

Oh! Thank you very much!

[KittyM]

My pleasure.  😃

[dmertz]

For a SEP-IRA contribution, the custodian reports the amount contributed *in* a particular year, not *for* a particular year, so your SEP-IRA contribution for 2017 made in 2018 won't be reported to the IRS until mid 2019 on the 2018 Form 5498 anyway.

[squidlady]

Wow, I had no idea. Thank you again.