Author Topic: any accountants out there that i can ask a question?  (Read 337198 times)

Offline Ygold

  • Dansdeals Gold Elite
  • ***
  • Join Date: Nov 2013
  • Posts: 241
  • Total likes: 21
  • DansDeals.com Hat Tips 0
    • View Profile
Re: any accountants out there that i can ask a question?
« Reply #2300 on: June 30, 2022, 10:41:57 AM »
What des one do if they don't yet have a SSN for a child born in '21? How do they file taxes?
Shout out to Meshugener!

Offline Dawie

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jan 2015
  • Posts: 1492
  • Total likes: 388
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: KBLM
Re: any accountants out there that i can ask a question?
« Reply #2301 on: June 30, 2022, 11:55:57 AM »
What des one do if they don't yet have a SSN for a child born in '21? How do they file taxes?
either wait or file and amend when you get it

Online ushdadude

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Apr 2013
  • Posts: 5859
  • Total likes: 569
  • DansDeals.com Hat Tips 5
    • View Profile
  • Location: NY
Re: any accountants out there that i can ask a question?
« Reply #2302 on: June 30, 2022, 12:30:23 PM »
My wife is a sole prop and already contributed 6k to her tIRA. can she still contribute 20% of her self employed income to her SEP-IRA or is the amount reduced by the 6k?

Offline Dawie

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jan 2015
  • Posts: 1492
  • Total likes: 388
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: KBLM
Re: any accountants out there that i can ask a question?
« Reply #2303 on: June 30, 2022, 12:41:58 PM »
My wife is a sole prop and already contributed 6k to her tIRA. can she still contribute 20% of her self employed income to her SEP-IRA or is the amount reduced by the 6k?
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps#:~:text=A%20SEP%2DIRA%20is%20a,a%20traditional%20or%20Roth%20IRA.

If I participate in a SEP plan, can I contribute to a Roth IRA in addition to receiving contributions under the SEP plan?
A SEP-IRA is a traditional IRA that holds contributions made by an employer under a SEP plan. You can both receive employer contributions to a SEP-IRA and make regular, annual contributions to a traditional or Roth IRA. Employer contributions made under a SEP plan do not affect the amount you can contribute to an IRA on your own behalf.

Because a SEP-IRA is a traditional IRA, you may be able to make regular, annual IRA contributions to this IRA, rather than opening a separate IRA account. However, any dollars you contribute to the SEP-IRA will reduce the amount you can contribute to other IRAs, including Roth IRAs, for the year.

Example 2: Nancy, age 45, is the owner and sole employee of JJ Investment Advisors. Nancy contributes the maximum allowable amount to her SEP-IRA for 2019, or $56,000. Nancy may also make regular, annual IRA contributions to her SEP-IRA, if her SEP-IRA allows this, or contribute to her Roth IRA at XYZ Investment Co. Her total traditional IRA and Roth IRA contributions cannot exceed $6,000 for 2019 and may be made in addition to her SEP contributions.

Online ushdadude

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Apr 2013
  • Posts: 5859
  • Total likes: 569
  • DansDeals.com Hat Tips 5
    • View Profile
  • Location: NY
Re: any accountants out there that i can ask a question?
« Reply #2304 on: June 30, 2022, 12:55:00 PM »
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps#:~:text=A%20SEP%2DIRA%20is%20a,a%20traditional%20or%20Roth%20IRA.

If I participate in a SEP plan, can I contribute to a Roth IRA in addition to receiving contributions under the SEP plan?
A SEP-IRA is a traditional IRA that holds contributions made by an employer under a SEP plan. You can both receive employer contributions to a SEP-IRA and make regular, annual contributions to a traditional or Roth IRA. Employer contributions made under a SEP plan do not affect the amount you can contribute to an IRA on your own behalf.

Because a SEP-IRA is a traditional IRA, you may be able to make regular, annual IRA contributions to this IRA, rather than opening a separate IRA account. However, any dollars you contribute to the SEP-IRA will reduce the amount you can contribute to other IRAs, including Roth IRAs, for the year.

Example 2: Nancy, age 45, is the owner and sole employee of JJ Investment Advisors. Nancy contributes the maximum allowable amount to her SEP-IRA for 2019, or $56,000. Nancy may also make regular, annual IRA contributions to her SEP-IRA, if her SEP-IRA allows this, or contribute to her Roth IRA at XYZ Investment Co. Her total traditional IRA and Roth IRA contributions cannot exceed $6,000 for 2019 and may be made in addition to her SEP contributions.
That's what I thought too but then an accountant told me that there is a difference between contributions based on self employment income and contributions made by an employer for an employee. He pointed to the 1040 instruction on page 91 explicitly state that if you are covered by such a plan and your income is too high, your eligibility to make regular IRA contributions may be reduced or eliminated.

Quote
Were You Covered by a Retirement
Plan?
If you were covered by a retirement plan
(qualified pension, profit-sharing (including
401(k)), annuity, SEP, SIMPLE,
etc.) at work or through self-employment,
your IRA deduction may be reduced
or eliminated. But you can still
make contributions to an IRA even if
you can't deduct them. In any case, the
income earned on your IRA contributions
isn't taxed until it is paid to you.

Offline Dawie

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jan 2015
  • Posts: 1492
  • Total likes: 388
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: KBLM
Re: any accountants out there that i can ask a question?
« Reply #2305 on: June 30, 2022, 04:19:02 PM »
That's what I thought too but then an accountant told me that there is a difference between contributions based on self employment income and contributions made by an employer for an employee. He pointed to the 1040 instruction on page 91 explicitly state that if you are covered by such a plan and your income is too high, your eligibility to make regular IRA contributions may be reduced or eliminated.


all true
Your question was can she make a contribution (not do you get a deduction)
also to for the numbers above to work you would might be phased out (SEP is 25% of Comp, so for a 61k SEP contribution you'd have to make 244k )
IRA income limit is 204k for MFJ
But in order to take deduction for he IRA your AGi has to be below 129k (Starts phasing out at 109k) for MFJ if you have a SEP

if you earn 145k and you do a SEP for 36,250, you can also do a traditional for 6k AFAIK
145k-36250= 108,750 AGI
« Last Edit: June 30, 2022, 04:25:05 PM by Dawie »

Online ushdadude

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Apr 2013
  • Posts: 5859
  • Total likes: 569
  • DansDeals.com Hat Tips 5
    • View Profile
  • Location: NY
Re: any accountants out there that i can ask a question?
« Reply #2306 on: June 30, 2022, 05:33:47 PM »
all true
Your question was can she make a contribution (not do you get a deduction)
also to for the numbers above to work you would might be phased out (SEP is 25% of Comp, so for a 61k SEP contribution you'd have to make 244k )
IRA income limit is 204k for MFJ
But in order to take deduction for he IRA your AGi has to be below 129k (Starts phasing out at 109k) for MFJ if you have a SEP

if you earn 145k and you do a SEP for 36,250, you can also do a traditional for 6k AFAIK
145k-36250= 108,750 AGI
Oh got it. the contribution limits and deduction limits are not the same.

Offline Jack out of the box

  • Dansdeals Platinum Elite + Lifetime Silver Elite
  • *****
  • Join Date: Oct 2015
  • Posts: 734
  • Total likes: 63
  • DansDeals.com Hat Tips 0
    • View Profile
  • Location: ארצינו הקדושה
  • Programs: Chase UR, BA Avios, AAdvantage, UA Mileage Plus, SPG
Re: any accountants out there that i can ask a question?
« Reply #2307 on: July 01, 2022, 03:27:41 AM »
either wait or file and amend when you get it
For CTC, ODC, EITC, AOTC, and RRC the SSN must be issued by the due date or extended due date of the tax return. Otherwise that child does not qualify for the credit. (I'm not sure offhand if the refundable childcare credit for US residents is subject to SSN issue date.)

Offline Dawie

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Jan 2015
  • Posts: 1492
  • Total likes: 388
  • DansDeals.com Hat Tips 1
  • Gender: Male
    • View Profile
  • Location: KBLM
Re: any accountants out there that i can ask a question?
« Reply #2308 on: July 01, 2022, 10:45:22 AM »
For CTC, ODC, EITC, AOTC, and RRC the SSN must be issued by the due date or extended due date of the tax return. Otherwise that child does not qualify for the credit. (I'm not sure offhand if the refundable childcare credit for US residents is subject to SSN issue date.)
In your experience they have been denying this or its just a rule and they give it anyway?

Offline Jack out of the box

  • Dansdeals Platinum Elite + Lifetime Silver Elite
  • *****
  • Join Date: Oct 2015
  • Posts: 734
  • Total likes: 63
  • DansDeals.com Hat Tips 0
    • View Profile
  • Location: ארצינו הקדושה
  • Programs: Chase UR, BA Avios, AAdvantage, UA Mileage Plus, SPG
Re: any accountants out there that i can ask a question?
« Reply #2309 on: July 01, 2022, 11:01:51 AM »
In your experience they have been denying this or its just a rule and they give it anyway?
Absolutely enforced. I've seen many denials. Just yesterday someone told me that his kids' SSNs were issued a few days after Apr 15 and they denied him the credits. (In that case the IRS was mistaken because his due date was not in April but rather in June. He needs to appeal it.)

Online ushdadude

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Apr 2013
  • Posts: 5859
  • Total likes: 569
  • DansDeals.com Hat Tips 5
    • View Profile
  • Location: NY
Re: any accountants out there that i can ask a question?
« Reply #2310 on: July 01, 2022, 01:25:34 PM »
Oh got it. the contribution limits and deduction limits are not the same.
Why isn't the sep contribution considered a business expense and the tIRA contribution considered a regular tax deductible contribution?


Offline incendia

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Sep 2011
  • Posts: 1195
  • Total likes: 49
  • DansDeals.com Hat Tips 8
    • View Profile
Re: any accountants out there that i can ask a question?
« Reply #2311 on: July 01, 2022, 01:30:50 PM »
My wife is a sole prop and already contributed 6k to her tIRA. can she still contribute 20% of her self employed income to her SEP-IRA or is the amount reduced by the 6k?

A sole 401k is something you might want to look into.

When I looked into Etrade and TD were the only major companies offering a free sole ROTH 401k

Online ushdadude

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Apr 2013
  • Posts: 5859
  • Total likes: 569
  • DansDeals.com Hat Tips 5
    • View Profile
  • Location: NY
Re: any accountants out there that i can ask a question?
« Reply #2312 on: July 01, 2022, 02:07:58 PM »
A sole 401k is something you might want to look into.

When I looked into Etrade and TD were the only major companies offering a free sole ROTH 401k


Yup. On the to do list. Vanguard has it too. Would be beneficial to allow a back door Roth IRA contribution without triggering the pro rata rule. Woke need to roll existing IRAs in


ETA: vanguard has a solo Roth 401k but not sure if it's free

Online ushdadude

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Apr 2013
  • Posts: 5859
  • Total likes: 569
  • DansDeals.com Hat Tips 5
    • View Profile
  • Location: NY
Re: any accountants out there that i can ask a question?
« Reply #2313 on: July 04, 2022, 04:18:09 PM »
Oh got it. the contribution limits and deduction limits are not the same.


I was just thinking, that if we're only going to get a deduction on the sep contribution and that the deduction for the contribution to the traditional IRA is phased out, I really have to open her a solo 401k and do a back door roth. There doesn't seem to be a tax advantage to keeping it a traditional IRA contribution. It doesn't seem like it would effect it tax burden for this year.

Offline av83

  • Dansdeals Platinum Elite
  • ****
  • Join Date: Jul 2014
  • Posts: 302
  • Total likes: 13
  • DansDeals.com Hat Tips 0
    • View Profile
Re: any accountants out there that i can ask a question?
« Reply #2314 on: Today at 01:48:09 PM »
If I don't need to use all my charity contributions this year due to other deductions I have (medical, taxes etc.) can I carryover my unused contributions to next year?