Discussion:SEP CONTRIBUTION NOT REPORTED
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Discussion Forum Index --> Advanced Tax Questions --> SEP CONTRIBUTION NOT REPORTED
Discussion Forum Index --> Tax Questions --> SEP CONTRIBUTION NOT REPORTED
| 30 January 2008 | |
| In February 2003, self-employed Taxpayer made a contribution to a SEP IRA which was more than he could claim on his 2002 return. The allowable amount was claimed on the 2002 return, with the intent to claim the balance on the 2003 return. Unfortunately, both Taxpayer and myself forgot to claim the deduction for the balance on the 2003 return, and thus Taxpayer paid tax on the additional $5,000 that was contributed to the SEP. This oversight went unnoticed until the Fall of 2007, when the SEP account was being transferred to a different broker who contacted me to determine what amount had been the original contributions as reported on the tax returns. This was about 4 months too late to file an amended return for the 2003 return. I tried to file an amended return anyway, asking either for the refund that would have been due (which I knew was a minute chance!) or at the very least to have the contribution earmarked as a non deductible contribution so that the Taxpayer will not pay tax on it a second time when it is withdrawn from the SEP account. I've tried phone calls to the IRS, all to no avail. No one seems to know what to do with it. Does anyone know how to remedy this so that this Taxpayer (who is also a friend of mine!) does not have to pay the tax on this amount twice? I would greatly appreciate any advice!!! | |
Death&Taxes (talk|edits) said: | 30 January 2008 |
| Could it not have been classified as a Non-deductible IRA on Form 8606?
The other thought is to take the history of the account from 2003 on, put the missed contribution toward 2003 and then the over contribution for that year to 2004 and onward, so that the year of adjustment might be now? This would only work if he made the maximum contribution this year. | |
| January 30, 2008 | |
| Indeed. And failing that, while it would be easy to just claim that he has 5k in basis in his SEP...he's likely overcontributed even on a non-ded. IRA front, right? So he can't claim it as non-deductible, or deal with an overcontribution...Might be worth a call to the Taxpayer Advocate on this one. But I'd work DT's angle first. | |
Death&Taxes (talk|edits) said: | 30 January 2008 |
| Oh dear, right you are, JR. I forgot the limit on IRAs back then wasn't what it is today to we old codgers. | |
| 31 January 2008 | |
| I thought about the 8606, but when I read the instructions for Form 8606 regarding SEP contributions says "if you make contributions to that IRA (excluding employer contributions you make if you are self-employed) they are treated as contributions to a traditional IRA and may be deductible or nondeductible." Thus, since my Taxpayer was self-employed, I did not feel we could use this form.
There was no additional contribution to the SEP after this one in question for 2003, so there is no contribution to keep carrying forward. Any other suggestions? Thanks for your time! | |
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