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TurboTax not calculating SEP max correctly?

Forum|Forum|11 months ago
April 9, 2025
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My 1099 income was ~76K with a ~9k loss in Schedule K-1. When I have TurboTax calculate my max SEP IRA contribution (traditional SEP in TurboTax), it says $30k - much higher than 25% limit. What's going on?

Best answer by dmertz

Given correct input, TurboTax does calculate the maximum SEP contribution correctly. Examine TurboTax's Keogh, SEP and SIMPLE Contribution Worksheet. Perhaps you have also marked the Maximize box for an individual 401(k) contribution or you have somehow incorrectly entered your self-employment income. The maximum permissible SEP contribution is 20% of net earnings. Net earnings are net profit minus the deductible portion of self-employment taxes. If your only self-employment income is the ~$76k, your maximum SEP contribution is ~$14,100.

I'm not sure how a Schedule K-1 would have anything to do with your self-employment income unless it was from a partnership that is separate from your other self-employment income. If it's from a partnership, there is an amount in box 14 with code A, and you have separate self-employment income from a separate business, there are likely additional restrictions on how much you can contribute to a SEP IRA.

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dmertzAnswer

Employee

Given correct input, TurboTax does calculate the maximum SEP contribution correctly. Examine TurboTax's Keogh, SEP and SIMPLE Contribution Worksheet. Perhaps you have also marked the Maximize box for an individual 401(k) contribution or you have somehow incorrectly entered your self-employment income. The maximum permissible SEP contribution is 20% of net earnings. Net earnings are net profit minus the deductible portion of self-employment taxes. If your only self-employment income is the ~$76k, your maximum SEP contribution is ~$14,100.

I'm not sure how a Schedule K-1 would have anything to do with your self-employment income unless it was from a partnership that is separate from your other self-employment income. If it's from a partnership, there is an amount in box 14 with code A, and you have separate self-employment income from a separate business, there are likely additional restrictions on how much you can contribute to a SEP IRA.

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poprocksAuthor

Hi dmertz,

Thank you for responding. I have checked everything multiple times - the only Maximize box selected is the one for Traditional SEP. There is a separate business I'm an investor in, but no income, it's a loan I made that's being repaid slowly but that still doesn't add up to get to that $30K value. Is there a way to see how the calculation is being made?