SEP IRA contribution is not lowering my net income?

Forum|Forum|3 years ago
April 8, 2023
1 reply
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When entering my SEP contribution, I expected the "Self-employment income and expenses" total to decrease by some percent of the contribution. It doesn't seem to change at all after adding the deduction.

The deduction was added through "Wages & Income -> Other Business Situations -> Self employed Retirement plans". Once added through that section, I am seeing an overall deduction to the amount owed, just not what I expected. I did not see an option to add it with the other self-employment expenses.

Does this sound right or is there another way to add it as part of the Self-employment expenses?

TurboTax Premier Online

Best answer by AliciaP1

You entered it in the correct section. For Schedule C filers, the SEP deduction does not change business income since it is not an allowable deduction prior to calculating self-employment tax. It is reported on Form 1040 Schedule 1 line 16 and is deducted as an adjustment to income.

To verify your SEP is reported correctly you can review your 1040 in TurboTax Online by following these steps:

Within your return, click on Tax Tools in the black menu on the left side of the screen.
Click on Tools.
Click View Tax Summary
Click Preview My 1040 in the black menu bar on the left
Scroll down to Schedule 1, Part II, line 16 to see your SEP deduction

To review in TurboTax CD/Download you can follow these steps:

Within your return, click on the Forms icon in the upper right of the screen to switch to Forms mode.
Scroll down in the menu bar on the left and select Schedule 1
In the preview screen, scroll down to Part II, line 16 to see your SEP deduction

AliciaP1Answer

To verify your SEP is reported correctly you can review your 1040 in TurboTax Online by following these steps:

Within your return, click on Tax Tools in the black menu on the left side of the screen.
Click on Tools.
Click View Tax Summary
Click Preview My 1040 in the black menu bar on the left
Scroll down to Schedule 1, Part II, line 16 to see your SEP deduction

To review in TurboTax CD/Download you can follow these steps:

Within your return, click on the Forms icon in the upper right of the screen to switch to Forms mode.
Scroll down in the menu bar on the left and select Schedule 1
In the preview screen, scroll down to Part II, line 16 to see your SEP deduction

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