For 2023 SEP/IRA limits are 25% of income or $66000 whichever is less. No limit on amount of income. TurboTax is not letting that happen and states that since our Adjusted gross income is $500,000 (From sale of our business) no contribution is available. BUT that is for IRA's and Roth's NOT SEP/IRA's. Help - is there a box that needs to be checked or unchecked for this to happen?
I assume that you are a sole proprietor or a partner in a partnership, otherwise the SEP contribution is reported on the business's tax return. A SEP contribution is entered in the self-employed retirement section of the business section of TurboTax. It is not to be entered anywhere under Deductions & Credits.
For a sole proprietor or partner, the limit for a SEP contribution is 20% of net earnings, not 25%. Net earnings are net profit from self-employment minus the deductible portion of self-employment taxes.
It seems that you have not understood my original reply. Nowhere in the business section of TurboTax where the self-employed retirement section for entering a SEP contribution is located will TurboTax make any mention of MAGI (except maybe in regard to a QBI deduction, but that has nothing to do with entering a SEP contribution).
Your screen grab indicates that you have entered this as a regular personal IRA contribution under Deductions & Credits, not as a SEP contribution. As I said in my original reply:
"A SEP contribution is entered in the self-employed retirement section of the business section of TurboTax. It is not to be entered anywhere under Deductions & Credits."
Please delete your erroneous regular IRA contribution entry and enter it in the business section as a self-employed retirement contribution.
I assume that you are a sole proprietor or a partner in a partnership, otherwise the SEP contribution is reported on the business's tax return. A SEP contribution is entered in the self-employed retirement section of the business section of TurboTax. It is not to be entered anywhere under Deductions & Credits.
For a sole proprietor or partner, the limit for a SEP contribution is 20% of net earnings, not 25%. Net earnings are net profit from self-employment minus the deductible portion of self-employment taxes.
According to the IRS website.
Contributions an employer can make to an employee's SEP-IRA cannot exceed the lesser of:
- 25% of the employee's compensation,
- or$66,000 for 2023 ($61,000 for 2022, $58,000 for 2021 and $57,000 for 2020)
Also, Annual compensation limit. You can't consider the part of an employee's compensation over $305,000 when fig- uring your contribution limit for that employee. However, $61,000 is the maximum contribution for an eligible em- ployee. These limits increase to $330,000 and $66,000, respectively, in 2023.
But that is okay BUT the software is not allowing the contribution to be made due to a MAGI of $500,000 which is from the sale of the business (Capital gains). I have adjusted numbers so that the 2 of us (Partners) get paid a 1099-NEC amount so we can make a SEP/IRA contribution. Software says NO!
It seems that you have not understood my original reply. Nowhere in the business section of TurboTax where the self-employed retirement section for entering a SEP contribution is located will TurboTax make any mention of MAGI (except maybe in regard to a QBI deduction, but that has nothing to do with entering a SEP contribution).
Window in TurboTax Deluxe Mac
We have several 1099-Misc before now NEC inputs to our Schedule C's and then we decide the amount to be contributed into IRA, SEP/IRA or Roth's. This year with the sale of a business we intend to make a large SEP/IRA contribution but again software is not allowing it to happen.
Your screen grab indicates that you have entered this as a regular personal IRA contribution under Deductions & Credits, not as a SEP contribution. As I said in my original reply:
"A SEP contribution is entered in the self-employed retirement section of the business section of TurboTax. It is not to be entered anywhere under Deductions & Credits."
Please delete your erroneous regular IRA contribution entry and enter it in the business section as a self-employed retirement contribution.
Thank you, finally found what you are describing in the income section. I seem to remember that I did that in the Deductions section in previous years.
Sorry!
It looks like no matter what I do paying ourselves a 1099-NEC income from the sale of the business and with the corresponding SEP/IRA contribution we pay more taxes. Dang!
Thanks again
Jim
I don't see how it could be proper for you to issue any Form 1099-NEC to yourself.
From a LLC. Sure.
Have done that for 20 years since we established our first LLC under guidance from a retired IRS investigator!
Jim
If the LLC is a disregarded entity, the business's income goes on Schedule C (or Schedule F for a farming business) without any Form 1099-NEC except for those Forms 1099-NEC issued to you by other companies.
If the LLC is a partnership, the partnership is required to file Form 1065 and your income from self-employment is reported to you in box 14 of Schedule K-1 (Form 1065), not on Form 1099-NEC.
If the LCC is an S corp you are not self-employed and your wages are reported to you on Form W-2.
I have tried that in the past and can not get any numbers to show up in box14.
probably my error in how data is entered so we do 1099-misc now NEC.
Jim
@dmertz thanks for your insight here. I'm hitting the same problem.
Could you help me find the "self-employed retirement section of the business section"? Is that in the "wages and income" section?