Should I list my SEP IRA contribution exp in 'other miscellaneous expenses' or is my income already deducted when the self-employment retire. plan lists the contribution?

I expected my net income to be reduced by the amount of the contribution, but it didn't. My tax balance due did reduce, though.

505

Expert Alumni

Jun 5, 2019 3:12:31 PM

No, you shouldn't list your SEP-IRA contribution as a miscellaneous expense. When you enter it under Self-Employed Retirement Plans, TurboTax automatically carries it to Line 28 of your Form 1040.

The SEP-IRA contribution is an adjustment to income, meaning it is subtracted from your total income to arrive at your adjusted gross income (AGI). You can see this for yourself by previewing the Form 1040 and scrolling down to Line 28.

Click the drop-down arrow next to Tax Tools (lower left of your screen).
Select Tools.
In the pop-up window under Other Helpful links… select View Tax Summary.
In the black menu box at the left of your screen, click Preview my 1040.
After the Federal 1040 opens, scroll down to line 28 to see the entry for Self-employed SEP, SIMPLE, and qualified plans. (Click the screenshot below to enlarge it for reference.)
Your total income is on Line 22 and your AGI is on Line 37, so you can scroll back and forth to verify that the SEP-IRA contribution was subtracted to adjust your income.

There is a special computation to calculate the maximum deduction if you are self-employed and have your own SEP-IRA. You'll find the details at this IRS link: SEP Plan FAQs - Contributions

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Should I list my SEP IRA contribution exp in 'other miscellaneous expenses' or is my income already deducted when the self-employment retire. plan lists the contribution?