Discussion:File tax returns before funding SEP ok?

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Discussion Forum Index --> Tax Questions --> File tax returns before funding SEP ok?


KENDRICK (talk|edits) said:

11 October 2006
I was told years ago that the IRS requires a taxpayer to fund his SEP before he files his tax return. I am always telling my extended SOLE P clients that I will not efile their returns until they let me know they have funded their SEPS for the prior year. Is this so? Can't find anything anywhere. Like right now I have a few clients who are going to fund their 2005 SEPS before October 16. I know they are going to do it. I want to get the returns efiled. Think I should wait? Do you think the IRS would really disallow a 2005 SEP contribution if I efiled a return today and the 2005 SEP contribution was made on Friday?

Deback (talk|edits) said:

11 October 2006
http://www.irs.gov/retirement/article/0,,id=111419,00.html#6

Is there a deadline to set up a SEP?

A SEP can be set up for a year as late as the due date (including extensions) of the business's income tax return for that year.

http://www.dol.gov/ebsa/Publications/SEPPlans.html

A SEP may be established as late as the due date (including extensions) of the company’s income tax return for the year you want to establish the plan. For example, if your business’s fiscal year (a corporate entity) ends on December 31 and you filed for the automatic 6-month extension, the company’s tax return for the year ending December 31, 2004, would be due on September 15, 2005, allowing you to make the initial SEP contribution no later than September 15, 2005.

Jdugancpa (talk|edits) said:

11 October 2006
Assuming "SOLE P" means a Sch C taxpayer, the extended due date for the SEP is 10/15 (10/16 this year) not 9/15. The return can be filed prior to the SEP being funded, but there is always the risk that the client will forget to fund it, or run into unexpected cash flow difficulties, necessitating an amended return. Therefore, it is generally a good idea to have the client confirm that it has been made prior to filing.

Henrika (talk|edits) said:

15 April 2007
Question: Sole proprietor sent filed return March 3rd 2007 for 2006 tax year. He did not deduct SEP contributions. He since received money so he can contribute after all by April 17th. Can he do that and file an amended return?

Riley2 (talk|edits) said:

15 April 2007
Yes, absolutely.

DebD (talk|edits) said:

15 April 2007
I have a question about this... I filed my sister's 2006 1040 with schedule C income in March 2007. It now dawned on me that she could have open up a SEP and made a 2006 contribution. My question is if she calls her financial advisor tomorrow, April 16th to set up a SEP and sometime this week she funds it, can I amend her return for 2006 showing a SEP contribtution?

DZCPA (talk|edits) said:

15 April 2007
Yes. You have 3 years to amend return.

DebD (talk|edits) said:

15 April 2007
Even though she did'nt open the SEP until AFTER she filed original return?

Riley2 (talk|edits) said:

16 April 2007
As long as it was funded by the due date of her return, the answer is yes.

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