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SEP IRA contribution on Sch C tax year 2020

Level 1

My client has an increase in Sch C income for 2020.  It appears that a SEP IRA contribution will help reduce tax due......

What is the "maximizing" the contribution option do and is there any reason not to maximize?

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3 Replies 3
Level 15

It means the software will calculate the maximum allowed deduction.

Reason not to- client can't pay that much or doesn't want to.

Level 7

Does the client have employees?  If so, they will also have to contribute at the corresponding contribution rate for employees that qualify - at least 21yo, worked at least three of the five years for the business  and received at least $600 in 2020.

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Level 15

If the return changes and it affects that qualification while you are working, it avoids over-contribution and avoids excess tax. Or, you hardcode how much they want to contribute.

"is there any reason not to maximize?"

When the client can't afford it.

"Level Up" is a gaming function, not a real life function.
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