My client underfunded her 2016 SEP account by $3,750. Her business return included a $18,500 SEP contribution deduction. How do I report the underpayment or would it be better to amend the 2016 tax returns?
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I have had this situation before and I have always amended the return as soon as my client tells me that they either missed the contribution or shorted it due to cash flow issues. This problem happens because you are allowed to fund a prior year SEP upto tax filing date including extensions. With a traditional defined contribution plan the funding is done by 12/31 so you know exactly how much to deduct on the tax form.Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR -
Thank you for your response, Atsman.Comment
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Yes, you will need to amend. The only time this ever happened with me, I told the client we won't be filing his extended return in the future until the SEP contribution is made."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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