I have clients (husband and wife) that own an S corp (real estate group). In 2021 they each received $12,000 of w2 wages ($24,000 total on their 1040) and $186,300 of S corp income.

They each contributed $12,000 into their SEP IRAs for tax year 2021 per their CPAs advice ($24,000 aggregately). Is that even possible given that is 100% of their w2 income?

My understanding is that their SEP IRA contributions would be capped at 25% of w2 income. So I thought they would each be capped at a $3,000 SEP IRA contribution ($6,000 total).

Am I missing something or did the CPA make a mistake?