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Married filing jointly. AGI $170k. we have an extension for…

Married filing jointly. AGI $170k...
Married filing jointly. AGI $170k. we have an extension for our 1040
My employer has a retirement plan. Wife is self employed with $6700 Net Profit on Schedule C Line 12
1) Can she contribute $6500 to her traditional IRA?
2) must the payment be postmarked or received before taxes are filed?https://www.irs.gov/retirement-plans/plan-participant-employee/2016-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work
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Answered in 9 minutes by:
10/12/2017
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,384
Experience: IRS licensed Enrolled Agent and tax instructor
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Hi. My name is ***** ***** I will be happy to help you.

Unfortunately it is too late to make IRA contribution for 2016, the deadline was April 18 (due date of the original return, not including extension). She can contribute to SEP IRA but she can only contribute about 25% of her self employment income.

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Customer reply replied 4 months ago
Eva,appreciate your expertise!
...my understanding is that one can make an IRA contribution until the extension date. Is that incorrect? Please show me a source.
Customer reply replied 4 months ago
I found it on IRS site. You are, of course, correct. Fortunately, we have a 401k. 100% of Net Profit on Schedule C line 29, before the deduction on line 19. Is that correct?

You can correct your contributions (to avoid penalty) if you over-contributed until due date of your return, including extension but you cannot make additional contribution after April 15.

See here under contribution limits: https://www.irs.gov/retirement-plans/ira-year-end-reminders

At this point you can still make a contribution to SEP (25% of SE income up to 54K), Simple IRA if you already have one established before Oct 2016 (100% of your SE income up to 12K + catch up + matching) or Solo 401K if you established one before end of 2016 (100% of your SE income up to 18K + catch up + profit sharing)

https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people

But if she is already contributing maximums to her 401K at work than she cannot contribute to any SE plans either.

emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3,384
Experience: IRS licensed Enrolled Agent and tax instructor
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Customer reply replied 4 months ago
thank you! for whatever reason, JustAnswer isn't allowing me to rate you now. When it does I'll give 5 stars! Thank you

You're welcome. Is there anything else I can help you with today?

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