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Question

Can I reduce my quarterly estimated tax payments by the amount of tax I estimate I will owe after taking the 25% SEP deduction?

Forum|Forum|10 months ago
May 21, 2025
2 replies
0 views

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@amyb5984 - yes, you are under no obligation to adhere to the 1040 ES vouchers that TT generated. If you have a better estimate (up or down), you can use that.

Employee

Be careful, though. If you are referring to the self-employed retirement deduction for a SEP contribution, the maximum permissible SEP contribution is 20% of net earnings. Net earnings are net profit minus the deductible portion of self-employment taxes. Mistakenly calculating based on only 75% of self-employment income being included in taxable income could result in underpayment of your estimated taxes.