SEP IRA and Sub S

Submitted by Stephen Csenge on Tue, 2011-02-08 19:00

I’m sure this is an age-old question but I have two accountants giving me two answers and I can not find any specificity in the IRS publications

For an individual operating a Sub-S corp. What number can they use to calculate the amount of SEP – IRA contribution, their wages only or the wages plus the taxable “income” from the Sub-S corp?



Submitted by mk foss on Tue, 2011-02-08 22:15

Only wages can be used for an S corp owner to calculate the SEP contribution. There has been much pressure to change the law and have S Corp earnings treated as self-employment earnings (like a partnership) that would allow a greater retirement contribution but that is not the current law.



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