SEP IRA contribution is not lowering my net income?

[pgallett]

When entering my SEP contribution, I expected the "Self-employment income and expenses" total to decrease by some percent of the contribution. It doesn't seem to change at all after adding the deduction.

The deduction was added through "Wages & Income -> Other Business Situations -> Self employed Retirement plans". Once added through that section, I am seeing an overall deduction to the amount owed, just not what I expected. I did not see an option to add it with the other self-employment expenses.

Does this sound right or is there another way to add it as part of the Self-employment expenses?

[AliciaP1 · Accepted solution]

You entered it in the correct section.  For Schedule C filers, the SEP deduction does not change business income since it is not an allowable deduction prior to calculating self-employment tax.  It is reported on Form 1040 Schedule 1 line 16 and is deducted as an adjustment to income.

To verify your SEP is reported correctly you can review your 1040 in TurboTax Online by following these steps:

1. Within your return, click on Tax Tools in the black menu on the left side of the screen.
2. Click on Tools.
3. Click View Tax Summary
4. Click Preview My 1040 in the black menu bar on the left
5. Scroll down to Schedule 1, Part II, line 16 to see your SEP deduction

To review in TurboTax CD/Download you can follow these steps:

1. Within your return, click on the Forms icon in the upper right of the screen to switch to Forms mode.
2. Scroll down in the menu bar on the left and select Schedule 1
3. In the preview screen, scroll down to Part II, line 16 to see your SEP deduction

[pgallett]

This is perfect. I was looking for a way to preview the 1040 and totally missed the summary link in the black bar.

Anywho, it looks like its there. Thanks again for the help.

[cba2m5]

Alicia,

I came across your response to this question after encountering a similar situation myself.  I have entered my SEP contributions but I am not seeing the number on Schedule 1, Part II, line 16.  

Thanks,

Cody

[BrittanyS]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

 @cba2m5