kadru_tainphu
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1099-MISC |
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My wife gets a 1099-MISC from her employer. It is reported as Other income. Can she open a SEP IRA (IRS web site says 25% of income is allowable)?
Thanks
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Tue Dec 17, 2013 4:53 pm |
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clydewolf
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Re: 1099-MISC |
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quote: Originally posted by kadru_tainphu My wife gets a 1099-MISC from her employer. It is reported as Other income. Can she open a SEP IRA (IRS web site says 25% of income is allowable)?
Thanks
On the amount of profit from her job, she can use that to fund her SEP. This amount is deducted from your gross income on 1040 line 28.
Your wife will need to pay employer taxes, SS and Medicare, on the profits from her working at a rate of 15.3%. To determine her profits she needs to complete Schedule C or C-EZ.
The profit as determined on Schedule C/Cez is reported on your 1040 line 12.
Then based on the profits she will complete Form SE to determine the amount of SS and medicare tax she needs to pay. This tax is reported on your 1040 line 62.
One half of the employer tax is subtracted from your gross income on your 1040 line 27.
If she buys health insurance she can deduct that expense on 1040 line 28.
You can learn more at irs.gov and reading some pubs:
* 334 - Tax Guide for Small Business
* 535 - Business Expenses
Next year she may want to make estimated payments or adjust your withholding (form W-4) to pay for the income and employment taxes.
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Thu Dec 19, 2013 9:38 pm |
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kadru_tainphu
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Cash: $ 1.55
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Joined: 17 Dec 2013
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1099-MISC |
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Thanks. How do we know that Line 56 (self employment taxes) covers social security and medicaid?
Thanks
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Fri Dec 20, 2013 11:04 pm |
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kadru_tainphu
New Member
Cash: $ 1.55
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Joined: 17 Dec 2013
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1099-MISC |
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Thanks. But can she take deductions for both IRA as well as SEP IRA?
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Sun Dec 22, 2013 1:14 am |
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kadru_tainphu
New Member
Cash: $ 1.55
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Joined: 17 Dec 2013
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1099-Misc |
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We could check her earning from ssa.gov web site. Thanks.
But can she calim both IRA and SEP IRA deductions in the same year?
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Mon Dec 23, 2013 2:31 pm |
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clydewolf
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Re: 1099-MISC |
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quote: Originally posted by kadru_tainphu Thanks. How do we know that Line 56 (self employment taxes) covers social security and medicaid?
Thanks
Your 1040 line 56 is for Social Security and Medicare (not medicaid).
Line 56 reads, "Self-employment tax. Attach Schedule SE".
Social Security and Medicare taxes are employment taxes. People that are self employed are both employer and employee. These taxes are calculated on Form SE.
Here is a link to the instructions for Form SE: http://www.irs.gov/pub/irs-pdf/i1040sse.pdf
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Mon Dec 23, 2013 3:30 pm |
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clydewolf
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Re: 1099-MISC |
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quote: Originally posted by kadru_tainphu Thanks. But can she take deductions for both IRA as well as SEP IRA?
Yes, if she otherwise qualifies and makes the contribution to her IRA. The SEP IRA is a plan from the employer. The IRA is a personal account.
Contributions to the SEP will lower her profits from self employment.
Contributons to a personal Traditional IRA are deductible.
She can make contributions to both plans and deduct them in the same tax year.
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Mon Dec 23, 2013 3:42 pm |
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kadru_tainphu
New Member
Cash: $ 1.55
Posts: 7
Joined: 17 Dec 2013
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1099-MISC |
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Thanks a lot. I did open a SEP IRA with 25% of her income. But I am still not sure about the total contribution limit allowed for 2013. Is it still possible to open a SIMPLE or some other IRA to save more taxes?
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Mon Dec 30, 2013 2:15 pm |
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