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I have an s Corp that I own 100 percent of the stock and get…

Customer Question
I have an s...

I have an s Corp that I own 100 percent of the stock and get a very reasonable w2. What do I base the sep contribution on ? The profit of the scorp or my W2?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

I started as an LLc (sole member) then did the s Corp election and am the only shareholder. I am on payroll now of course and get a W2. I have opened an sep and understand I can contribute 25% up to $53,000 of earnings. My question is: what is the 25% derived from? The W2 or the profit of the S Corp?

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I don't believe so

Submitted: 20 days ago.Category: Tax
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Answered in 7 minutes by:
4/2/2018
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 20 days ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience: Former IRS Revenue Agent
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I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

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Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 20 days ago

Dear Customer,

25% of participant's compensation, wages. -- NOT company's profit.

Smaller of the 25% of the wages or 54,000.

See table 1 of the enclosed IRS website link.

https://www.irs.gov/publications/p560#en_US_2017_publink10008788

Regards,

Fiona

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