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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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My tax program wants to put my SEP on line 8 as a negative

Customer Question

my tax program wants to put my SEP on line 8 as a negative number - seems wrong to me after looking at IRS guidelines.
JA: Thanks. Can you give me any more details about your issue?
Customer: I'm the only employee and owner of S-corp and i meant line 8 of 1120s
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Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

According to instructions for that line -

Don't include salaries and wages reported elsewhere on the return, such as amounts included in cost of goods sold, elective contributions to a section 401(k) cash or deferred arrangement, or amounts contributed under a salary reduction SEP agreement or a SIMPLE IRA plan.

So SEP contributions should NOT be included into that line.

Expert:  Lev replied 9 months ago.

Contributions an employer can make to an employee's SEP-IRA cannot exceed the lesser of:

  1. 25% of the employee's compensation, or
  2. $53,000 (for 2015 and 2016)

Note: Elective salary deferrals and catch-up contributions are not permitted in SEP plans.

See for reference -

Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)

.

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