Sources of information for TT's SEP calculation.

[Onefish]

From what sources of self-employment income (other than Schedule C adjusted net income) does TT's calculation of maximized SEP draw?  My maximized SEP contribution total is coming in at an amount that exceeds my Schedule C income. Clearly the calculation is drawing from another source (s?) of self employment income.  How else could the "maximize" calculation for a SEP contribution be far more than should be allowed?

[JamesG1]

This IRS FAQ states:

Compensation

What compensation is included in determining SEP contributions for an employee?

For an individual who is not self-employed, compensation included in determining SEP contributions includes:

• wages, tips, and other compensation from the employer subject to income tax withholding under section 3401(a),
• amounts described in Internal Revenue Code Section 6051(a)(8), including elective contributions made under a SIMPLE IRA plan, and
• compensation deferred under a 457 plan.

What compensation is included in determining SEP contributions for a self-employed individual?

For purposes of the SEP plan rules, a self-employed individual's compensation means net earnings from self-employment.

determined under Internal Revenue Code section 1402(a).

Net earnings means self-employment income reduced by:

• The deductible portion of your SE tax from your Form 1040 return, Schedule 1, on the line for deductible part of self-employment tax, and
• The amount of your own retirement plan contribution from your Form 1040 return, Schedule 1, on the line for self-employed SEP, SIMPLE, and qualified plans.

What sources of self-employment income are you reporting?

[Onefish]

Let me recap:

TT is calculating an amount for a maximum SEP contribution that is about the same amount as my wife's Sch. C self employment income. Clearly that is more SEP than should be allowed.

She also receives W-2 income from her former employer (it's an odd thing--retirement payments that they pay out as if it were salaries ; that's a long story but it shouldn't affect the SEP calculation). Other than that there is no other source of income that should be part of the SEP calculation.  

So, is it the W-2 income that is somehow entering the mix?  If so how to remove it from the SEP calculation?

[JamesG1]

Are your spouse's payments from a 457(b) retirement plan but reported on a W-2?  Please clarify.

[Onefish]

Problem solved actually. I checked a box for 401(k) contributions. Unchecked it; problem solved. Thanks anyway.

The W-2 income had nothing to do with it.

[Onefish]

This wasn't the problem. I had erroneously checked a box for 401(k) contributions. When I removed that checked box the SEP calculation worked perfectly. Thanks for the suggestion, but it helped to eliminate possible mistakes.