Discussion:SEP IRA SCORP

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Discussion Forum Index --> Advanced Tax Questions --> SEP IRA SCORP


Discussion Forum Index --> Tax Questions --> SEP IRA SCORP

Vijayacpa (talk|edits) said:

9 April 2014
A client of mine filed his SCorp Tax Returns. Now he wants to contribute to SEP IRA. He took 60k in payroll from the SCorp. Can he amend the scorp return and make the scorp contribution?

Ckenefick (talk|edits) said:

9 April 2014
A little late for that, if the return wasn't extended, right?

Captcook (talk|edits) said:

9 April 2014
Isn't the date for contribution the earlier of the due date or the date filed? I admit I haven't looked this up in a while.

Ckenefick (talk|edits) said:

9 April 2014
Yes, it is.

Kendrick (talk|edits) said:

9 April 2014
Seems someone told me if you were a SCHEDULE C filer, then even though you filed your tax returns by April 15, you still had until October 15 to fund a SEP IRA. Seems they said this way, a taxpayer could get his refunds and then use that money to fund his SEP.

If true, wouldn't this same concept work for the S-Corp guy? 25% of his W-2 wages before September 15 into a SEP, even though the S-Corp was filed timely? Just amend the S-Corp return to take the deduction. Of course if the individual returns have already been filed, you would have to amend these as well. May not be worth it.

I always extend my clients if they want to fund their SEP later, and don't e-file their returns until they've told me they've funded their SEP. Has always been my policy.

Ckenefick (talk|edits) said:

9 April 2014
3/15 has come and gone and the guy presumably timely filed the 1120S...without an extension.

Vijayacpa (talk|edits) said:

9 April 2014
Yes he has filed a timely return on 3/15.

The earlier of the due date or the date filed...Why can't he amend the return and still make the contribution? Is there any notice or section from IRS I can refer?

Captcook (talk|edits) said:

9 April 2014
The earlier of the due date or the date filed...Why can't he amend the return and still make the contribution

Doesn't the first phrase here answer the second?

Vijayacpa (talk|edits) said:

9 April 2014
Is there any IRS ruling or notice you can share?

Vijayacpa (talk|edits) said:

9 April 2014
Would the logic of Kendrick not apply?

Ckenefick (talk|edits) said:

9 April 2014
Did you extend the return?

Vijayacpa (talk|edits) said:

9 April 2014
1120 S is filed...1040 is pending

Ckenefick (talk|edits) said:

9 April 2014
I will assume no extension, not that it matters. Before I proceed, let me ask you this:

I have a client that filed his 2012 return on April 15, 2013. He now wishes to make a 2012 deductible IRA contribution.

Can I tell him it's okay? If not, why not?

Taxpro69 (talk|edits) said:

9 April 2014
Depositing and deducting contributions

When must I deposit the contributions into the SEP-IRAs?

You must deposit contributions for a year by the due date (including extensions) for filing your federal income tax return for the year. If you obtain an extension for filing your tax return, you have until the end of that extension period to deposit the contribution, regardless of when you actually file the return.

If you did not request an extension to file your tax return and did not deposit the SEP plan contributions by the filing due date for that return, you are not allowed to deduct any SEP plan contributions on that year’s return. The contributions may be deducted on the following year’s return.

If you improperly deducted SEP plan contributions on your return, you must file an amended tax return as soon as possible.

IRS has lots of FAQ's for the simple questions.

Taxpro69 (talk|edits) said:

9 April 2014
Kendricks logic might apply if the S-Corp filed an extension prior to filing the S-Corp return as Kendrick's recall was not 100% correct. If extension filed you have until extended due date of return to fund regardless of when return is filed, if no extension you have until due date of return.

Vijayacpa (talk|edits) said:

9 April 2014
Ckenefick - No he will not get to deduct...But what if he filed a return early and wants to amend it by 4/15/2013 to make the contribution.

Taxpro69 - Thanks...Yes agreed.

Thank you all so much for the inputs

Vijayacpa (talk|edits) said:

9 April 2014
Ckenefick - No he will not get to deduct...But what if he filed a return early and wants to amend it by 4/15/2013 to make the contribution.

Taxpro69 - Thanks...Yes agreed.

Thank you all so much for the inputs

Ckenefick (talk|edits) said:

9 April 2014
Ckenefick - No he will not get to deduct...But what if he filed a return early and wants to amend it by 4/15/2013 to make the contribution.

You said it was an S-corporation. I'm assuming no extension was filed, so it's too late. You can't just amend a return to throw a deduction on it when the deduction arose outside of the "deduction window." That's like 12/31/13 coming to a close and then me saying, "Hey, I just paid the property tax bill on my house on 4/9/14, before 4/15/14, so I'm going to take the deduction on my 2013 1040." It doesn't work that way. When the deduction window closes (12/31/13 in my little example), it closes. In your case, the deduction window closed on 3/15/14 for tax year 2013. You cannot open it, even with a pry bar and heavy equipment.

This is what everyone is telling you...and we don't even need to get into the complicated situations like we see in RR 66-144, RR 84-18 and PLR 8336006.

Vijayacpa (talk|edits) said:

10 April 2014
Thank you Ckenefick ...I get it now.

Kendrick (talk|edits) said:

9 May 2014
Hmmm. Taxpro69 got me to thinking. Say a Schedule C filer wants to fund a SEP IRA. But he can't fund it until October, doesn't have the doe by April 15. So we file an extension. Fine. Now he has until October 15 to fund the SEP IRA.

But now say the guy wants to file to get the refund to fund the SEP. So if he files by say, June 15, would he still have until October 15 to actually fund the SEP since he did file an extension? Or is June 15, actual filing date after the extension, taxpayer's last chance to fund the SEP?

I have always wondered about this. My policy has been to not file a tax return until the SEP IRA has been contributed.

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