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Bill is unavailable, but I am able to address your concern. My name is XXXXX XXXXX I am a CPA.
How are you today?
Unfortunately, when you have an S Corp, the contributions to the SEP IRA are reflected on the 1120S return. So, what that means is you would need to amend your 1120S tax return in order to reflect the additional payment made.
An individual could not deduct the cost of a SEP IRA contribution made for themselves - but you can if you are an S Corp because you are considered an employee.
You can read more about this in publication 560 which is available HERE
So...not clear. So since I have an S Corp, I can make the contribution out of my own funds and not reflect that in my business tax return
No, you cannot...it will have to go through your business, and be deducted on your business tax return
which in turn flows through to your personal return
I'm truly sorry if this is inconvenient for you
The only way I can do that is to take it as a business expense.
Thanks. I understand
That is correct. An indvidual can never deduct a SEP contribution they make for themselves
Got it. Thank you.
You're welcome. If you would, please rate my resopnse as "excellent" so that I may receive credit for assisting you today
One more thing
Related to this
okay go ahead
and when you are finished, please rate again because it didn't go through last time
Thanks...ok. I am going to make the SEP IRA contribution out of the business (will amend return). I also have a solo 401k and the S Corp made a contribution to that as well. Is it allowable to make contributions to BOTH a SEP IRA and a solo 401k?
Yes, you can contribute to both and deduct contributions to both those accounts
Thank you. :>) I will rate as excellent once again, and make sure it goes through.
Ok great, thanks I appreciate it