lump sum KEOGH contribution

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semperlux
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lump sum KEOGH contribution

Post by semperlux »

The company I work for allows for a lump sum Keogh contribution at the beginning of every year instead of deducting every paycheck until the limit. How do I reflect that on my taxes? My confusion arises because If the company took it out every paycheck, it's from my gross pay before any taxes are deducted or before I pay any estimated taxes on it. However when I contribute as lump sum, I'm writing them a check from my checking account contributing with after tax money. So even though on my K1 the contribution is listed as pre-tax, I'm already taxed if I contribute using the lump sum way.

I called my company's HR, and they didn't know either, said they will get back to me, so I figure I would see if anyone contributes to a Keogh this way and can shed some light. Yes, I'll ask my accountant as well if I don't get any info from my company or from here and the internet.

Thank-you.
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semperlux
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Re: lump sum KEOGH contribution

Post by semperlux »

bump.
Charon
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Re: lump sum KEOGH contribution

Post by Charon »

You may not have much luck here, since Keogh plans are now rare (being largely replaced with SEP plans and similar).
Jonezez
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Joined: Mon Jun 02, 2008 2:31 pm

Re: lump sum KEOGH contribution

Post by Jonezez »

semperlux wrote: Tue Jan 12, 2021 3:18 pm The company I work for allows for a lump sum Keogh contribution at the beginning of every year instead of deducting every paycheck until the limit. How do I reflect that on my taxes? My confusion arises because If the company took it out every paycheck, it's from my gross pay before any taxes are deducted or before I pay any estimated taxes on it. However when I contribute as lump sum, I'm writing them a check from my checking account contributing with after tax money. So even though on my K1 the contribution is listed as pre-tax, I'm already taxed if I contribute using the lump sum way.

I called my company's HR, and they didn't know either, said they will get back to me, so I figure I would see if anyone contributes to a Keogh this way and can shed some light. Yes, I'll ask my accountant as well if I don't get any info from my company or from here and the internet.

Thank-you.
I contribute lump sum to Keogh at beginning of the year but have an accountant that does taxes for me.
Reviewing 2019 return, the accountant listed the Keogh contribution under "Schedule 1" Line 15 (Self-employed SEP, SIMPLE, and qualified plans).

The total adjustments to income are added up on line 22 of schedule 1.

Then when you look at the form 1040, that adjustment to income from Schedule 1, line 22 is moved over to line 8A on form 1040.

Line 8A, form 1040 will reduce your income from the line above (7b) so that the taxable income (line 11b) is taking that keogh contribution into account; thus making your keogh contribution tax-deductible (by reducing your taxable income).
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semperlux
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Re: lump sum KEOGH contribution

Post by semperlux »

Jonezez, that is exactly what I need! Thank-you so much! Much appreciated.
Jonezez wrote: Wed Jan 13, 2021 2:07 am I contribute lump sum to Keogh at beginning of the year but have an accountant that does taxes for me.
Reviewing 2019 return, the accountant listed the Keogh contribution under "Schedule 1" Line 15 (Self-employed SEP, SIMPLE, and qualified plans).

The total adjustments to income are added up on line 22 of schedule 1.

Then when you look at the form 1040, that adjustment to income from Schedule 1, line 22 is moved over to line 8A on form 1040.

Line 8A, form 1040 will reduce your income from the line above (7b) so that the taxable income (line 11b) is taking that keogh contribution into account; thus making your keogh contribution tax-deductible (by reducing your taxable income).
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