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Level 3
posted Apr 15, 2024 1:18:50 PM

TT H&B desktop not figuring SEP max contribution correctly

I am confused.  Husband is a sole proprietor LLC.  We both contributed $7500 to our Traditional IRA accounts so we can save $3300 on our taxes.  But now I want to see how much he can contribute to a SEP from his business also.  I am filing an extension so listed a safe number of $50,000 as his net business income.  TT is saying his max allowed to a SEP is $49,721, then deducting his $7500 from that and saying he can contribute $42,221 to a SEP. 

 

TT is telling me I have to withdraw my $7500 from my traditional IRA (so basically I can't do any IRA contribution at all for 2023?)  I do not have a job (but work for free on his business) so I know I can't do a SEP, but can't I do a max Traditional IRA as a spouse?

 

And from reading IRS publications, shouldn't the max contribution for a SEP on my husband be 25% of his $50,000 net profit ($12,500 and not the $42,221 it is telling him)?  

 

So TT is really messing things up the way I see it as I, as a spouse, should be able to make a $7500  Traditional IRA contribution.  And my husband should be able to make a $7500 Traditional IRA contribution and a $12,500 SEP contribution.  He is 72 and I am 65 if our ages play into any of this

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2 Replies
Level 15
Apr 15, 2024 8:35:06 PM

Somehow you have entered far more than $50,000 of net profit from self-employment.

Level 3
Apr 20, 2024 1:07:26 PM

I put in an even 50,000 as the estimated income from his business .  And it still doesn’t explain why it is telling me I have to withdraw my $7500 traditional IRA