Question

-Kathy is 60 years of age and self-employed. During 2018 she reported $100,000 of revenues and $40,000 of expenses relating to her self-employment activities. If Kathy has no other retirement accounts in her name, what is the maximum amount she can contribute to a simplified employee pension (SEP) IRA for 2018? (Round your final answer to the nearest whole number)

A) $11,152.

B) $17,152.

C) $12,000

D) $55,000.

-Kathy is 60 years of age and self-employed. During 2018 she reported $500,000 of revenues and $100,000 of expenses relating to her self-employment activities. If Kathy has no other retirement accounts in her name, what is the maximum amount she can contribute to a simplified employee pension (SEP) IRA for 2018? (Round your final answer to the nearest whole number)

A) $55,000.

B) $61,000.

C) $77,337.

D) $369,400.

Answer 1

First question:

Option A is correct

	Particulars	SEP IRA
a	Dollar limit	55,000
	Percent of net income:
b	Percentage	20%
c	Schedule C net income	60,000
	Less:
d	Deductible SE taxes	4,238.87
e= c-d	Net income	55,761.14
f= b*e	Limit on net income	11,152.23
	Dollar allowance
g= minimum of a,f	Maximum contribution	11,152.23

Second question:

Option A is correct

	Particulars	SEP IRA
a	Dollar limit	55,000
	Percent of net income:
b	Percentage	20%
c	Schedule C net income	400,000
	Less:
d	Deductible SE taxes	13,317.10
e= c-d	Net income	386,682.90
f= b*e	Limit on net income	77,336.58
	Dollar allowance
g= minimum of a,f	Maximum contribution	55,000.00