topic Re: SEP IRA in Get your taxes done using TurboTax

SEP IRA

crumbster — Sun, 14 Feb 2021 19:47:55 GMT

I have a traditional IRA contribution maxed 7K

I show an amount due on Fed taxes

I am trying to contribute to a SEP IRA in addition to the traditional IRA

If I tell it to max the contribution It lowers amount due. fine

If I tell it that I only put in 3,000 it makes the amount due rise.

What's up with that?

Re: SEP IRA

macuser_22 — Sun, 14 Feb 2021 19:51:37 GMT

A SEP is not a Traditional IRA.

If an employee, SEP contributions are in box 12 on your W-2, if self-employed, SEP contributions are reported on your Schedule C. Nothing is entered into the personal IRA contribution section.

Re: SEP IRA

crumbster — Sun, 14 Feb 2021 22:27:48 GMT

not the question I have an IRA Traditional I also Have a SEP Ira I max my Regular IRA and try and con tribute to my SEP Ira if I hit the max IRA for my SEP it lowers my Tax due, If I contribute 3,00 to my Sep it raises my Tax due..... wtf?

Re: SEP IRA

macuser_22 — Sun, 14 Feb 2021 22:41:55 GMT

A personal Traditional IRA and SEP are separate and each has it's own limits. One does not affect the other when properly entered.

Re: SEP IRA

crumbster — Tue, 16 Feb 2021 17:25:17 GMT

Still does not address the problem

why when entering an amount of 3,00 in the sep does my taxes due go UP

If I tell it to max the IRA the taxes go down..

does not make any sense at all.. If I enter the 3,000 amount it should lower may taxes a bit...

Re: SEP IRA

DaveF1006 — Tue, 16 Feb 2021 22:45:28 GMT

It sounds like that $3000 amount is an excess contribution. Can you provide more details?

Re: SEP IRA

crumbster — Wed, 17 Feb 2021 16:16:46 GMT

I have 0 contribution to the SEP at this time. I have a max contribution to my traditional IRA. Again if I tell the software to max my SEP contribution, it Lowers my amount due. If I tell it to just add 3K it raises the amount of taxes due So if it was excess wouldn't that happen with both scenarios ?

Re: SEP IRA

macuser_22 — Wed, 17 Feb 2021 16:25:42 GMT

@crumbster wrote:

I have 0 contribution to the SEP at this time. I have a max contribution to my traditional IRA. Again if I tell the software to max my SEP contribution, it Lowers my amount due. If I tell it to just add 3K it raises the amount of taxes due So if it was excess wouldn't that happen with both scenarios ?

That is entirely possible and not unexpected if $3K is more that the maximum amount that TurboTax calculated that yiu are allowed to contribution and the excess is subject to penalty on a 5329 form so your tax increases.

When TurboTax "maximizes" the contribution then it applies the maximum *allowable* amount which can be much less than $3K and that will reduce your taxable income.