large IRA deposit

[OldCarGuy]

the system reduces my contribution to $7500 -- i thought the limit was much higher

[Bsch4477]

Nope. That’s the limit if over age 50. 

[dmertz]

Make sure that you are not entering contributions made to an employer plan as personal IRA contributions.  Enter amounts shown in box 12 of your W-2 only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.

[OldCarGuy]

this money went into a old SEP IRA -- does that make a differecne ??

[dmertz]

Making a personal contribution (not a SEP contribution) to a SEP IRA is permitted by the tax code and is treated on your tax return as any other personal IRA contribution.  However, when making a regular personal contribution to a SEP IRA you must tell the SEP-IRA custodian that it's a regular contribution and not a SEP contribution so that it is reported correctly on Form 5498.  Some SEP-IRA custodians to not allow regular personal contributions to be made to a SEP IRA so that they don't have to deal with the difference in the way contributions to the account would have to be reported.  To avoid any confusion, it's usually best to make the regular personal contributions to a separate ordinary traditional IRA.

[OldCarGuy]

where is this entry in Turbo Tax ??

[dmertz]

SEP contributions from self-employment income are entered in the Business section under Business Deductions and Credits, not not under Deductions & Credits where you would enter a regular personal traditional IRA contribution.

[OldCarGuy]

the system gives me the same answer -- $7500 max, balance acharged 6% ??

[dmertz]

You are entering the contribution as a regular personal contribution which has a $7,500 contribution limit.  If you are trying to enter a SEP contribution made from income from self-employment, you are entering it in the wrong place as I mentioned above.

[OldCarGuy]

I'm trying not to ask a dumb question BUT : which catagory does this fall under in the busness/dedections-credits

other credits

health

retirement 

other

if tried retirment -- same $7500 cap?

[dmertz]

busness/dedections-credits for a SEP contribution.

[OldCarGuy]

still can't find "SEP IRA" under this tab -- im about ready to give up, it's probably sitting right in front of me!!

[DoninGA]

@OldCarGuy If you are using the TurboTax online web-based editions -
Click on Tax Tools on the left side of the program screen.

Click on Tools.

Click on Topic Search.

Type in self-employed retirement. With the key words highlighted, click on GO.

If you are using the TurboTax desktop CD/Download editions -

Click on Search on the upper right of the desktop program screen

Type in self-employed retirement and Enter

Click on Jump to self-employment retirement

[OldCarGuy]

i found it -- but it seems the anount she can contribute is a % of her income -- true??

[dmertz]

The maximum SEP contribution for a self-employed individual is 20% of net earnings.  Net earnings are net profit minus the deductible portion of self-employment taxes.