SEP IRA

[crumbster]

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?

[macuser_22]

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.

[crumbster]

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?

[macuser_22]

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

[crumbster]

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...

[DaveF1006]

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

[crumbster]

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 ?

[macuser_22]

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@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 ?

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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.