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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14845
Experience:  15years with H & R Block. Divisional leader, Instructor
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Im making a contribution to my SEP IRa from my business account.

Customer Question

I'm making a contribution to my SEP IRa from my business account. Can I deduct this contribution from my personal income?
Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

Robin D :

Hello and thank you for using Just Answer,
Depending on your business entity type you would deduct the contributions in the following way, Sole Proprietors and Partners deduct contributions for themselves on line 28 of Form 1040.
For employees Sole proprietors deduct them on Schedule C (Form 1040), Profit or Loss From Business, or Schedule F (Form 1040), Profit or Loss From Farming; partnerships deduct them on Form 1065, U.S. Return of Partnership Income; and corporations deduct them on Form 1120, U.S. Corporation Income Tax Return, or Form 1120S, U.S. Income Tax Return for an S Corporation.
If you are an employee of your business entity then the amount paid by your business entity is not shown on your tax return because the income is not reflected there either.


JACUSTOMER-eahwq8y5- :

The business is set up as an S-CORP, so the deduction would be done for my corporation and have no deducion benefit for my personal income?

Robin D :

That is correct. The S Corp is making the contribution for you as an employee. The contribution is not added to your wages so you would not receive a deduction for it yourself (directly). SEP contributions are deductible in arriving at ordinary income for the S-Corp.

JACUSTOMER-eahwq8y5- :

how about if I make a Simple-IRA contribution?

Robin D :

You would need to see if your contribution would be deductible.

If you are covered by a retirement plan at work, use this table to determine if your modified AGIaffects the amount of your deduction.

If Your Filing Status Is...

And Your Modified AGI Is...Then You Can Take...
single or
head of household

$58,000 or less

a full deduction up to the amount of your contribution limit.

more than $58,000 but less than $68,000

a partial deduction.

$68,000 or more

no deduction.

married filing jointly orqualifying widow(er)

$92,000 or less

a full deduction up to the amount of your contribution limit.

more than $92,000 but less than $112,000

a partial deduction.

$112,000 or more

no deduction.

married filing separately

less than $10,000

a partial deduction .

$10,000 or more

no deduction.

If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the "single" filing status.
Robin D :

Based on the above chart you may be able to use a deduction but it would depend on your filing status and your income.

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