SEP IRA
I have a regular job/salary and contribute to a 403B through work, and to an ROTH IRA.
I also work outside independently and filed a schedule C for the outside income for 2008. I an mot a corporation. Is there a way I can shelter a portion of that income since it is taxed at a higher rate due to my paying both employer/employee tax contributions for social security, etc. ?
Can I open a SEP IRA or some other vehicle which will allow me to deduct and shelter that income. How much (is there a percentage or an amount) can be sheltered. Thanks. Susan
Permalink Submitted by mk foss on Sun, 2009-09-27 23:01
You can open a SEP for your Schedule C earnings. The maximum contribution is 20% of your Schedule C income reduced by one-half of SE tax – the amount from line 27 page 1 of Form 1040. The SEP can be opened as late as the extended due date of your return and the payment made then.
Unfortunately it does not reduce income subject to the SE tax, but it reduces your over all tax.