Income outside of work and Sep IRA

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am
Posts: 4232
Joined: Sun Sep 30, 2007 9:55 am

Income outside of work and Sep IRA

Post by am »

I was payed 1k for a deposition in 2013. I am a w2 worker but this was side income. Can I take 20% or so and place it in a SEP IRA to reduce tax burden?

Also I earned another 500-1000 in surveys and honoraria. Can this also be used as income towards Sep Ira? Since these surveys are from multiple companies, I do not think I need to pay taxes on this income?
jnet2000
Posts: 320
Joined: Tue Mar 19, 2013 4:22 pm

Re: Income outside of work and Sep IRA

Post by jnet2000 »

am wrote:I was payed 1k for a deposition in 2013. I am a w2 worker but this was side income. Can I take 20% or so and place it in a SEP IRA to reduce tax burden?

Also I earned another 500-1000 in surveys and honoraria. Can this also be used as income towards Sep Ira? Since these surveys are from multiple companies, I do not think I need to pay taxes on this income?
I am no CPA or tax expert but I am a small business owner. It sounds like you are a sole proprietor and you'd report your income on Schedule C. Those organizations would issue you 1099 and would not have withheld any tax. You would pay taxes on any profit left over after you have deducted expenses. You can contribute approximately 20% of your self employed income to a SEP. You have to account for self employment tax. Vanguard has a great calculator you can use: https://personal.vanguard.com/us/SbsCal ... Controller. Consult your accountant, of course!
"You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing" Warren Buffet
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