After doing some more research I'd like to try and explain the situation regarding my wanting to talk by phone about trying to defer some income to lower my personal tax liability on my 2012 1040 return. Perhaps after I explain this it may not be necessary to have a phone call to resolve my questions, but I'd like to leave that option open just in case.
Explanation / Situation:
I have a tax liability as it stands right now on my 2012 1040 (due Oct 15) of $2360.00
I'd like to lower this tax liability if possible as much as possible.
This liability is primarily caused by income we have to report from our K-1's that pass income to us from the Sub S Corp business we have. The profit / income doesn't actual come to us. It stays in the S-Corp. but we have to report the profits on our personal 1040 return.
My wife is also a partner in a Farm Partnership she inherited some years ago. The income from that partnership also stays in the partnership but we have to report it on our 1040 each year. That income is very small, I mention it only because of the strategies I'd like to suggest to lower our tax liability.
Our personal income comes to us in the following manner:
1.) My Wife is a school teacher with a salary.
2.) I receive a small salary from the S-Corp business
3.) We receive interest income from the S-Corp on a note that we setup years ago when we incorporated the S-Corp and sold the sole proprietorship to the S-Corp (This also causes a tax liability)
4.) I also have another small proprietorship business that has income. However this year it has a loss.
5.) My wife receives some royality payment for oil lease income approx. $1200.00 a year. This is reported to us via 1099 Misc but it goes on Sch E of the 1040
We both have retirement accounts. My Wife has a 401 k at work and I have a 401 k plan under the S-Corp. We also have personal individual IRA accounts.
I should have deferred more profit sharing into the S-Corp 401 k, but I didn't know at the time how much to put in because I was behind on the bookkeeping. We also missed contributing to our personal IRA for 2012. I though we had until the tax extension deadline (but I now know I was wrong).
I'd like your opinion as to whether we could open a SEP IRA either personally or under the small proprietorship business I have to make a contribution for 2012 since it could be opened by or before Oct 15th?
My tax program says the employer side of a SEP IRA can't make a contribution for 2012 because it has a loss this year. My question is can I make a personal deferral into a SEP IRA?
Or is it possible to use the interest income that comes to me from the S-Corp on a 1099 INT as an income bases to establish a SEP IRA?
Or is is possible to use the income that we have to report from the K-1's we receive from the S-Corp and the Farm partnership usable as income to setup a SEP IRA?
Or do you have any other suggestions on a way to lower the tax liability for 2012?
Thank you for taking the time to look at this.