Question

Can I enter Self-Employed SEP IRA contributions in TurboTax Deluxe?

Forum|Forum|5 years ago
March 2, 2021
1 reply
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I read the article about SEP IRA contributions, and it says I should be getting a "Jump To" option for Self-Employed Retirement options when I search for SEP IRA. I get that option for another search, but nothing on SEP IRA. Am I doing something wrong? Does Deluxe not cover SEP contributions?

Thanks.

H

HelenC12

No, TurboTax Online Deluxe does not support SEP IRA's.

Before you enter your SEP IRA contributions, first make sure you've entered self-employed income. This allows us to calculate the maximum amount you're allowed to contribute to your SEP IRA.

You may use the following TurboTax products to report your business income and related SEP IRA:

If you're using the TurboTax Online version, you may use TurboTax Self-Employed, and TurboTax Live Self-Employed.
If you're using the TurboTax CD\Download version, you may use Deluxe, Premier, or Home & Business.
See What are the advantages of the TurboTax CD/Download software over the Online version?

Note: A Simplified Employee Pension (SEP) or (SEP-IRA) provides business owners with a simplified method to contribute toward their employees' retirement as well as their own.

Contributions are made to an IRA set up for each plan participant and cannot exceed the lesser of:

25% of compensation paid during the year
$57,000 for 2020 ($56,000 for 2019)

Investment, distribution, and rollover rules are the same as traditional IRAs.

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C

cornfarmer1Author

Thanks for the reply. I'm not sure which box I checked... But I'm using the downloaded desktop version of deluxe, not the online version. Does anybody know for sure whether desktop download deluxe will allow for SEP IRA?

Thanks.

VolvoGirl

@RobertB4444 Oh that's smart. so schedule C Part II (line 19? I know SEP IRA is not exactly profit-sharing plan but similar) will be the only place in my tax return that mentions SEP IRA.

Schedule C line 19 is for your employees pension plans not yours.

Per the IRS:

Plan compensation for a self-employed individual

To calculate your plan compensation, you reduce your net earnings from self-employment by:

the deductible portion of your SE tax from your Form 1040 return, Schedule 1, on the line for deductible part of self-employment tax, and
the amount of your own (not your employees’) retirement plan contribution from your Form 1040 return, Schedule 1, on the line for self-employed SEP, SIMPLE, and qualified plans.

You use your plan compensation to calculate the amount of your own contribution/deduction. Note that your plan compensation and the amount of your own plan contribution/deduction depend on each other - to compute one, you need the other (this is a circular calculation). One way to do this is to use a reduced plan contribution rate. You can use the Table and Worksheets for the Self-Employed (Publication 560) to find the reduced plan contribution rate to calculate the plan contribution and deduction for yourself.

Go to Federal or Business

Income

Scroll down to Other Business Situations

Self Employed Retirement Plans