SEP Contribution for 2% Shareholder

[equinecpa]

Shareholder W-2 at present:

Box 1: 20104
Box 3: 16000

Difference between box 1 and 3 is Health insurance premiums added to compensation.

For SEP purposes-is box 1 or box 3 used?

[DaveinTexas]

Stole this from Riley2

"For nonshareholders, the SEP contribution is based on the W-2 box one amount plus the amount of elective deferrals plus the amount of cafeteria plan salary reductions. Sec. 404(a)(12) and Sec. 415(c)(3)(D). For shareholders, the contribution is based on the amount in box one (or the amount that should have been in box one)."

Be careful with Box 1 and SEHI going forward from June 30th by the way. Obamacare outlaws the reimbursement after June 30th. I wonder if anyone has heard any updates of the IRS extending this through the end of this year....