Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
For the SEP IRA you can contribute 25% of the salary of $72,000 up to a maximum of $51,000
But for your salary you would be able to contribute up to $18,000
Is there anything else that I can assist you with today? If not, please rate my response as "excellent" so that I may receive credit for assisting you today
I have asked follow up questions but havent got an answer to that
It says if you are an owner and employer, then the contribution rate is more like 20% of the salary and not 25% of the salary (Can you expand a little more on this please)
Also when calculating 25%, shouldnt we calculate 25% of my salary with both company A & company B?
You would only place 25% of your salary from that business, not all your businesses combined, when calculating your SEP IRA contribution. It's only the business that has the SEP-IRA, not company A&B.You would still be able to put in the entire 25%, but the deductible portion may be less. You can review publication 560 for more details on that, which can be found here: http://www.irs.gov/pub/irs-pdf/p560.pdf
You can use a calculator on the Fidelity website that will calculate this for you:
https://www.fidelity.com/retirement-ira/small-business/sep-iraPlease let me know if you need further information. Otherwise, please rate as "excellent" so that I may receive credit for assisting you today.
Thank you for the reference to Section 560. I have not been able to follow this section which is why I put the exact numbers to you. I am not interested in contributing if I cannot claim a deduction. In the scenario above, can you please guide me how much can I contribute and claim deduction for?