Arthur Kamlet wrote:
- quote -

the deduction. Then you would also derive a net amount of 18.59%
due to the SE deduction.
See the Fidelity calculator.
http://personal.fidelity.com/product...alc.shtml.cvsr

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In article <fllvk3$qr0$1[at]reader2.panix.com> , kamlet[at]panix.com (Arthur Kamlet) writes:
| In article <hJlfj.15956$v_4.5155[at]trnddc03> ,
| Phil Marti <prm20871[at]verizon.net> wrote:
| > "Arthur Kamlet" wrote:
| | > > I believe the SEP limit is 20% of Schedule C net profit, less 1/2 SE
| > > tax, less above the line SE medical deduction.
| | > It went up to 25% of Schedule C minus the SE tax adjustment and the SEP
| > adjustment a couple of years ago, and it winds up being 20% of the Schedule
| > C bottom line. I've never seen anything about an effect from the medical
| > insurance deduction.
|
|
| Phil
|
|
|
| When I look at Pub 560 Chapter 5 worksheet it seems the SEP is 20% of
| [net Sch C] less [1/2 SE tax]?

With parens around the last two terms.

| I could not find a reference to medical; not sure where I got that from?

Maybe because it's the other way around, i.e., the health insurance
deduction's cap is adjusted for the SEP contribution?

Dan Lanciani
ddl[at]danlan.*comn

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- quote -

I had TurboTax (the 2007 edition) "maximize" it for me, and it came up
a figure of about 18.5%. Not that TurboTax is the end-all ...

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In article <hJlfj.15956$v_4.5155[at]trnddc03> ,
Phil Marti <prm20871[at]verizon.net> wrote:
- quote -


Phil



When I look at Pub 560 Chapter 5 worksheet it seems the SEP is 20% of
[net Sch C] less [1/2 SE tax]?


I could not find a reference to medical; not sure where I got that from?
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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"Arthur Kamlet" wrote:

- quote -

It went up to 25% of Schedule C minus the SE tax adjustment and the SEP
adjustment a couple of years ago, and it winds up being 20% of the Schedule
C bottom line. I've never seen anything about an effect from the medical
insurance deduction.

--
Phil Marti
Clarksburg, MD

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On Jan 3, 8:49 pm, "Phil Marti" <prm20...[at]verizon.net> wrote:
- quote -

Awesome. That gets me close. I coulda sworn I read SOMEWHERE
that the SE-tax adjutsment DID need to be added back in, but Pub 590
seems pretty clear that it doesn't.

- quote -

Yes, I use cash accounting. So to make sure I got this straight, I
haven't billed
for December 2007 yet, and obviously won't get paid until sometime in
2008. So
that's NOT part of my 2007 SE income. That completely solves the
problem,
thanks. Guess I oughta call and make SURE they don't include
December on
my 1099 - I suppose I could simply not bill it until I get the
1099 :-)

Thanks again, John

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In article <6fgfj.15180$v_4.11361[at]trnddc03> ,
Phil Marti <prm20871[at]verizon.net> wrote:
- quote -


I believe the SEP limit is 20% of Schedule C net profit, less 1/2 SE
tax, less above the line SE medical deduction.





- quote -



ArtKamlet at a o l dot c o m Columbus OH K2PZH

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"JGE" wrote:

- quote -

Your SEP limit is 20% of the Schedule C bottom line, if that helps. IRS
Publication 560.

- quote -

You're correct on all fronts. Neither the SEP contribution nor the SE tax
adjustment needs to be added back.

- quote -

Assuming you're a cash-basis taxpayer (most people are) it's income when you
are paid. It sounds like this, plus a maximum SEP contribution, should take
care of your problem. If it doesn't, get back to us.

--
Phil Marti
Clarksburg, MD

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Kinda a three-part question ...

I'm a contractor who has some W-2 income (through an agency) and
some 1099-MISC income. I thought it was gonna be a slow year for
me, so I maxed out my Roth contribution and also converted $2000.
I've also contributed close to the max for the 401K on the W2 job,
and plan to do a maximum 18.5% SEP-IRA contribution off
the sole-proprietor self-employment income.
Turns out my AGI is looking like it's gonna be over $100K, disallowing
the conversion and getting into the phase-out zone for contribution.

First question, am I computing "modifed AGI for Roth purposes"
correctly ?
I know to start with AGI. Then subtract the conversion $2000. I
know you
have to add back in a traditional IRA contribution, but it looks to me
like the
SEP-IRA contribution does NOT need to be added back in, because it's
on
line 28, not line 32, and only the latter has to be added back in. I
also read
somewhere that you have to add back in the adjustment for 1/2 self-
employ
tax, but Pub 590 doesn't seem to show that.

Second, is there ANY way to reduce my AGI now that the year has
ended ?
I guess the $3K+ that I fell short of maxing out the W2-job 401K is
water
under the bridge. The only other thing I can think of, I haven't
billed for
December on the 1099 job yet. Is that income reportable the year the
work was done, or the year I bill it and get paid ? If the former,
can I
somehow defer it ? (I suppose I could "forget" to put it on my
December
bill, and then remember it when I bill for January, but that sounds
likely
to be illegal).

Third, if I *am* screwed (my AGI is over $100K, but I guess I
shouldn't
REALLY be complaining about that :-), how should I proceed. How big
a
pain is it to remove the excess Roth contribution ? Mainly I'm
wondering
how the heck I go about computing the earnings on the excess, since of
course that must be removed too. I DON'T think I want to
recharacterize,
because my SEP-IRA is all pre-tax money now, and I don't want to end
up
with some after-tax money in there (since the recharacterized
contribution
won't be deductable, since my income is high and I had the 401K plan).

Thanks much, John

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