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How to calculate SELF EMPLOYMENT TAX deduction for retirement plans [SEP IRA + Solo 401k]


How to calculate SELF EMPLOYMENT TAX deduction for retirement plans. This calculation is for SEP IRA and SOLO 401k profit-sharing contributions. ///////////////////////////////////////////////// Get answers FASTER... Join this channel to get access to perks: Chat on discord: Join Link Support on Patreon: ----------------------------------------------------- Are you ready for professional investment advice? We can help you with financial planning and asset management. Let us guide your investments to your financial freedom. START HERE Our financial planning process is an ongoing relationship because as you grow, your financial plan grows with you. At Sickle Hunter Financial Advisors, we believe that saving and making sound financial decisions will help improve your life’s changing needs and objectives. Retirement, college planning, wealth building, social security, and career benefit packets are only a few of the financial decisions that you may face in your lifetime and we’re here to help guide you. TRAVIS T SICKLE, CFP®, EA®, AAMS®, CRPC®, RICP® CERTIFIED FINANCIAL PLANNER™ Company Website: twitter: @travissickle Instagram: facebook: LinkedIn: Sickle Hunter Financial Advisors 1646 W Snow Ave. Suite 144 Tampa, FL 33606 ------------------------------------------------------- Gear Used in Videos Income Protection: You have a 1 in 4 chance of becoming unable to work due to disability. Your Breeze Disability Insurance policy will replace part of your lost income if and when you need it. Apply here Partnership referral links Aura Identity Theft Protection *Up to 50% off* HTTPS://www.aura.com/travis Seeking Alpha 50% Discount All Amazon links are affiliate links ____________________________________________________________________________ Information in this video is for educational and entertainment purposes only. sicklehunter.com/disclosures ____________________________________________________________________________ #travissickle...(read more)



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As a self-employed individual, calculating your retirement plan deductions can be a daunting task. However, with the proper knowledge and tools, you can calculate your self-employment tax deduction for retirement plans with ease. This article will provide you with the steps needed to calculate your self-employment tax deduction for retirement plans, specifically for SEP IRA and Solo 401k plans. Firstly, let's take a look at what a SEP IRA and a Solo 401k plan are. A SEP IRA, or Simplified Employee Pension Individual retirement account, is an employer-funded retirement plan for self-employed individuals or small business owners. It allows you to contribute up to 25% of your net self-employment income, up to a maximum contribution of $58,000 (for 2021). The contributions are tax-deductible and grow tax-deferred until you withdraw them. On the other hand, a Solo 401k plan, also known as an individual 401k, is a retirement plan designed for self-employed individuals or small business owners with no employees (besides a spouse). In this plan, you can contribute up to 100% of your net self-employment income, up to a maximum contribution of $58,000 (for 2021). This plan also allows for tax-deductible contributions and tax-deferred growth. Now that we have a basic understanding of these plans, let's dive into how to calculate your self-employment tax deduction for retirement plans. Step One: Determine Your Net Self-Employment Income Your net self-employment income is the amount you earn from self-employment after deducting any business expenses. To calculate this, subtract your business expenses from your gross self-employment income. Business expenses can include office supplies, advertising, travel expenses, and more. Step Two: Calculate Your Self-Employment Tax Self-employment tax is the tax paid by self-employed individuals on their net self-employment income. It includes the social security and Medicare taxes that are typically paid by both employers and employees. For 2021, the self-employment tax rate is 15.3% for individuals earning up to $142,800. After $142,800, the social security tax rate drops to 2.9%. To calculate your self-employment tax, multiply your net self-employment income by 15.3%. Step Three: Determine Your Maximum Contribution Limit For SEP IRA plans, the maximum contribution limit is 25% of your net self-employment income or $58,000, whichever is less. For the Solo 401k plan, the maximum contribution limit is also $58,000 or 100% of your net self-employment income, whichever is less. Step Four: Subtract Your Self-Employment Tax from Your Maximum Contribution Limit To calculate your self-employment tax deduction, subtract your self-employment tax from your maximum contribution limit. For example, if your net self-employment income is $100,000, your self-employment tax would be $15,300. If you are contributing to a Solo 401k plan, your maximum contribution limit would be $58,000. To calculate your self-employment tax deduction, subtract $15,300 from $58,000, resulting in a deduction of $42,700. In conclusion, calculating your self-employment tax deduction for retirement plans may seem complicated, but with the right information, it can be straightforward. By following the steps outlined above, you can calculate your self-employment tax deduction for both SEP IRA and Solo 401k plans with ease. Remember to consult a financial advisor to better understand which plan is best for you and your financial goals. https://inflationprotection.org/how-to-calculate-self-employment-tax-deduction-for-retirement-plans-sep-ira-solo-401k/?feed_id=76413&_unique_id=64068a1c217dc #Inflation #Retirement #GoldIRA #Wealth #Investing #independentcontractor #selfemploymenttaxes #selfemploymenttaxesexplained #selfemploymenttaxesllc #selfemployed #sepira #Solo401k #taxes #travissickle #SEPIRA #independentcontractor #selfemploymenttaxes #selfemploymenttaxesexplained #selfemploymenttaxesllc #selfemployed #sepira #Solo401k #taxes #travissickle

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