I have a quick question in regard to SEP IRAs.
I am employeed an an employee of a hospital and contribute fully to a 403b/457 plans.
I have about 15K in independent contractor income this year. Can I place 20 % of 15K into a SEP and then deduct unreimbursed business expenses from the difference, or make the deductions first and then take place 20% of the remaining amount into a SEP? Thanks

Zip Code: 19106

The amount you can contribute into a SEP is equal to 20% of your net self-employment income.

So you first need to subtract your expenses against your income to calculate net self-employment income. You then subtract 50% of your self-employment tax from that amount, and then multiply that figure by 20% to figure out your maximum SEP contribution.

Make sure to deduct your SEP contribution as an Adjustment to Income on the bottom of page 1 of the 1040. You will not claim your SEP contributions as a deduction on your Schedule C.

I hope this answers your question.

Zip Code: 01801