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    #1

    sep question

    2017 limit is $54000. I have client that wants to put in as much as possible. But worksheet only show $27000 using a 10% ra te. $27000 is quite a bit less than 10% of his income. Cant find explanation of how percentages work with the maximum deduct. Can someone help explain or send me a link that explains?
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    #2
    The amount on which the percentage is applied is after deducting any contribution for employees, the SE tax, AND after factoring in the amount for the retirement contribution for the owner himself, so the actual percentage allowed to the owner is a reduced rate. Rather than me showing how this works, the IRS page has a good explanation with an example that includes a "proof."

    Self-employed individuals: Calculating your own retirement plan contribution and deduction | Internal Revenue Service
    https://www.irs.gov/retirement-plans/self-employed-individuals-calculating-your-own-retirement-plan-contribution-and-deduction
    If you are self-employed, you calculate your self-employment tax using the amount of your net earnings from self-employment and following the instructions on Schedule SE. However, you must make adjustments to your net earnings to arrive at your plan compensation.
    jklcpa

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