How to calculate SEP IRA contributions for self employed
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- Опубліковано 2 чер 2024
- How to calculate SEP IRA contributions if you are self employed. In this video I'm focusing on the SEP IRA for the self employed, schedule C filer or sole proprietor.
The SEP IRA contribution calculation for small business owners who are schedule C filers is different than S corporation small business owners.
The amount that is used as compensation differs because 1/2 of self employment is deductible as a business expense and contributions are only from employers. Employees do not contribute to a SEP IRA.
0:00 | Introduction
1:15 | SEP IRA Contribution Deadline
1:45 | SEP IRA Contribution Limits
3:02 | SEP IRA Net Profit
4:20 | Schedule SE for Self Employment Tax
7:05 | 1/2 Self Employment Tax
8:12 | SEP IRA Contribution Calculation
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![How to calculate solo 401k contributions [Self Employed Retirement Plan]](/img/n.gif)
Took me a long time to find this. Very helpful
Much Appreciated. Very clearly stated. You earned my subscription. I'm about to check out your entire catalog. Many Thanks!
Thank you for this video.
My accountant couldn't be bothered to explain to me why it was 20% instead of 25%
He just said "it's been like that since 1957", which was not reassuring.
Thank you for this service!
time for a new accountant.
Great explanation! Thank you!
Thank you for this helpful video. Seriously appreciated it.
This video was so helpful. Thank you Travis.
This was immensely helpful. Thank you so much!
wow! Man you are amazing. Thank you for the help!!!
Excellent explanation!
Thank you so much for doing this!!!!
Awesome SEP Calc
Video!! You are so easy to follow!!
Thank you! Also checkout my videos on solo 401k and why they are better than the SEP.
Nicely done!
Great video. Thank you
Good demo. I’ve been taught to just memorize the magic numbers on this. 18.59 for 25%, 12.12 for 15%. Nice to understand where these numbers come from though
Thank you so much for the tutorial!! I’m opening a SEP for the first time this year and this cleared up all of my confusion 😄
Thank you!
Thank Youuu!
Thank you and great video! So for a self-employed sole proprietor the max contribution is just 20%.
What about for 2020? Not exceeding the lesser of 20% or $57,000? Or it still stays at 20%?
It’s not always 20%. If you earn over social security threshold the math is a little different. The caps are both $57k and 20%. Whichever is less. Depending on income, s-Corp may make more sense if you want to max fund.
What happens when there’s been an over contribution to a SEP ? That is, how is it rectified to the allowable contribution, say , upon seeing my CPA next year? (I just know I’m going to miscalculate by a grand or two!)
thank you! how do you also calculate the employer contributon for qualified employees? I am starting a SEP this year, and just do not understand how to use the employer contribution for the employees (and myself) as a deduction.
It’s an expanse for the business. The math for employees is simple. Contribution rate x w2 earnings.
Thank you so much for the explanation! Subscribed! I'm self-employed/no employees, and recently established a SEP. I have already filed my tax for 2020 in Feb, and obviously I didn't report any SEP contribution. Is it still possible to contribute to my SEP for 2020 (now that I can clearly know the exact amount I can contribute for that year). or is it too late, and I should start contributing in 2021? Thank you.
You can file an amendment but go checkout the solo 401k videos first. It might be a better plan for you. I just posted a bunch
@@TravisSickle Thank you so much Travis! I'll do that. I'll also look for youtube videos on how to file an amendment with IRS haha
I think you forgot to put the links to the Schedule C and Schedule SE forms in the description
Excellent video. Do you have anything with HOW the transaction the employer funds the SEP IRA? As an owner (S-Corp) Does the company issue a check to the employee (self) and the employee (self) then needs to deposit the funds into the SEP?
July 17, 2023
Question.... What about if your spouse is an employee? Is the matched contribution to them also used to lower taxable income? i.e. I contribute 15% to my SEP IRA as the employer and then also 15% to my spouse as an employee. Are both deductible and lower my taxable income?
If made to the traditional sep yes. There is also a new Roth sep. which would be after tax.
Thanls. I was quite confused as to how much to put in my sep ira vs my dividend portfolio. I always wondered why people just did not put everything into a sep and now i know. Youre limited based on how much you make each year.
The solo 401k is better.
Sent you a note Trav. tks.
Saw it. Just replied to email
Thanks for video. I get confused when you say "employer". I do not have a biz. I have worked 38 yrs as an employer. But now I am paid in all cash (I teach golf ). Does your video apply to me or do I have to have a biz?
It depends. It sounds like you're an independent contractor which would mean you're a small business owner. If you don't have a business name or registered as a business then you're a sole proprietor. Same thing for this purpose. I would suggest you get a business name for liability purposes alone.
Can I contribute to a traditional Ira and SEP and max both out???
Possibly, just depends on income limits. This is a good question and I’ll do a video on this.
@@TravisSickle Thanks. I wanna be able to put money into Traditional before Dec 31, but if I’m not allowed I won’t put any in and just do the Sep
Ok, are you trying to contribute as much as possible or just $6k?
@@TravisSickle $7000 if im allowed. I’m over 50. And 20% into Sep
Checkout a solo 401k. I have videos on it.
If I just started my business as a sole-prop, and earned $600K on my W2 job, but only $5k in my new biz can I still deduct up to $58,000 for my SEP for myself
No, it has to be the plan attached to the income
The limit is 100% of plan comp or 66k (limits for 2023 went up) whichever is less.
Is there a catch-up associated with a SEP? I am a freelance consultant. I have already contributed the maximum and catch-up to a Roth IRA. Great video. Thank you.