SEP IRA

Posts Tagged ‘deductions’

Question: My 941’s filed timely however they did not reflect my deductions for a SIMPLE IRA. How do I adjust?

FICA & Med are correct. How do I adjust the other taxes?

Answer: I’m confused by your question. Contributions to SIMPLE IRA’s do not lower the taxes you report quarterly on a 941 form. Yes, they are pretax dollars, but you still have to pay tax on the gross amount of income paid out if you are the employer. There is no deduction for SIMPLE IRA Contributions or what you have matched as the employer.

Question: Currently I have SEP, can I still buy tranditional IRA and get full or partial tax deduction?Thank you?

Answer: Obviously you know you can do both. The deductability of the IRA Contribution is based on your marital status and your adjusted gross income. If you are single the IRA would be fully deductible if your AGI is under $50,000. Between $50,000 and $60,000 you would allocate between deductible and non-deductible. Above $60,000 the IRA would be fully non-deductible.
If you are married the phase out limits are for AGI between $75,000 and $85,000.
You may also want to consider a ROTH IRA for the non-deductible portion if you meet the rules for contributing to a ROTH IRA.

SEP vs. IRA

Question: U.S fedral Tax question? ?

sue is an architect for a local firm where she receives as annual salary. she also does interior design out her home office. for 2007 sue’s gross income consisted of 70,000$ in salary and her scheduale C bottom line of $ 50,000. these are the only items affecting lines 7-22 of sue’s 2007 form 1040
supply a written answer to the following questions showing well-labeled computations.
1- What was Sue’s total income in 2007?
2-what was Sue’s adjusted Gross Income in 2007?
3-could sue make an IRA Contribution?
4-could Sue take a deduction for both an IRA and a SEP( or similar)?

Answer: According to your question:
line 7 __________$70,000
line 12 _________$50,000
line 22 ________$120,000 — this is total income
line 27 __________$3,533 — one half of self employment tax (50000*.9235*.153*.5)
line 37 ________$116,467 — adjusted gross income

For Traditional IRA:
deduction phaseout for someone covered by an employer retirement plan is $52,000 to $62,000 MAGI if single or head of household or $83,000 to $103,000 MAGI if married filing jointly or qualifying widow(er). the phaseout if your spouse is covered by a retirement plan and you aren’t is between $156,000 and $166,000 MAGI. There is no phaseout if you and your spouse are not covered by an employer retirement plan.

For a Roth IRA:
phaseout between $99,000 and $114,000 MAGI for single or head of household or between $156,000 and $166,000 MAGI.

Employer contributions to a SEP-IRS will not affect the amount an individual can contribute to a Roth IRA

1) $120,000
2) $116,467
3) yes – but Traditional is deductible only if she is not covered by a retirement plan with her employer, Roth is only allowed if she is married filing jointly
4) no – a SEP IRA would mean she is covered by an employer retirement plan and her income is too high to claim a traditional IRA deduction if this is the case