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2019 correction for OIH, changes 2019 max SEP contribution amount

Just-Lisa-Now-
Level 15
Level 15

So I missed Office in Home for one of my SE clients in 2019.

Adding this deduction changes her max SEP contribution amount that she made for 2019.

Can I just allocate the over contribution to 2020 return?

I know when we make SEP contributions the bank doesn't actually apply them to a particular year (like a traditional IRA) its up to us to decide which year they apply to.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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7 Replies 7
qbteachmt
Level 15

You still need to deal with the Excise tax on it. You can typically handle it one of 3 ways: get it back, leave it and pay the penalty tax, or allocate it until it is absorbed to future years.

I find great resources for these from the investment companies all over the web. Her's one:

https://www.investopedia.com/articles/retirement/04/042804.asp

 

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"Level Up" is a gaming function, not a real life function.
qbteachmt
Level 15

Oh: "I know when we make SEP contributions the bank doesn't actually apply them to a particular year (like a traditional IRA) its up to us to decide which year they apply to."

I'm pretty sure you are supposed to identify it as Current Year or Prior, so that 5498 shows which year it applies to.

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"Level Up" is a gaming function, not a real life function.
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Just-Lisa-Now-
Level 15
Level 15

You dont, I even verified with my bank, they told me they dont care what year its for, they post it in the year its made, its up to me to decide which year its used for.  Its not like a trad IRA, where you have to specify the year its for,


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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sjrcpa
Level 15

Was it paid in 2019 or 2020?


ex-AllStar
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Just-Lisa-Now-
Level 15
Level 15
it was made in 2020, so I should be able to allocate the overage to the 2020 tax year, right?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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qbteachmt
Level 15

"so I should be able to allocate the overage to the 2020 tax year, right?"

Yep.

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"Level Up" is a gaming function, not a real life function.
sjrcpa
Level 15

Yes.


ex-AllStar