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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 577
Experience:  10 years experience
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I am paid a guaranteed payment income as a working member

Customer Question

I am paid a guaranteed payment income as a working member of the LLC.
3 questions
1. Are Guaranteed payments taxed as normal income or are they subject to the 15.3 SE Tax
2. Can I contribute to a SEP IRA or traditional IRA with this type of income
3. My Spouse only has W2 income of $2400 how much can I contribute to her IRA
Submitted: 8 months ago.
Category: Tax
Expert:  Jonathan Tierney replied 8 months ago.
Hi, my Jonathan and I can help. Yes, guaranteed payments received for providing personal services to a partnership would qualify as self-employment income, of which you would also qualify to make a SEP or traditional IRA contribution. However, your actual self-employment income should be shown in box 14 of your Schedule K-1 because other earnings or losses of the partnership might be included in your self-employment income. Do you know how much your self-employment income is? Your wife's IRA contribution limit can also include your earned income as well so she might be able to make the maximum IRA contribution.
Expert:  Jonathan Tierney replied 8 months ago.
You may want to check out this site http://www.fool.com/investing/general/2015/07/16/spousal-ira-rules-for-couples-in-2015.aspx regarding spousal IRA contributions and this site https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions regarding SEP IRAs. Your "earnings" for the self-employed are your self-employment earnings minus one-half your self-employment tax minus your retirement plan contrbributions.