If you are self employed or have a side hustle and you want to put more money into retirement accounts so you can deduct it from your taxes, SEP IRA is an option for you.
How much can you put into SEP IRA?
If you are self-employed, you can contribute 20% of your business income.
Example: If you earn 100k profit from your business, you can contribute 20k into a SEP.
You can deduct 20k from your income but the total tax savings is only whatever your tax rate is. so if your tax rate is 37%, you will save 37% of 20k, which is $7400. If you need the money now, you shouldn’t contribute to SEP.
So you would only want to contribute to SEP if you are trying to maximize retirement funds.
Visit IRS.gov for more info about retirement accounts.
Moontree Tax Service can explain personal taxes in more detail through email or a phone call.
