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QuickBooks Team

Recording a SEP IRA contribution in QBs

QuickBooks Self-Employed supports Schedule C only, Bluedad729.

 

When you record SEP-IRA, you can tag it as personal. Although, this is not included in the tax calculations. You'll have to record it manually when you're ready to file taxes at the end of the year. Here's how:

  1. Go to Transactions.
  2. Click Add transaction.
  3. Fill in the details, then select Personal.
  4. Click Save

 

Let me add this article on how to categorize and edit transactions in QuickBooks Self-Employed for future reference. 

 

If there's something else that we can do for you, please don't hesitate to let us know. 

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Level 1

Recording a SEP IRA contribution in QBs

Of course there is no SEP IRA category listed, so this advice is not helpful.

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Level 1

Recording a SEP IRA contribution in QBs

LLC S-Corp sole proprietor here with SEP IRA.

Using QB Premier 2006 and yes, you are reading that correctly.
If it works why should I change it? :-)

Helps me do payroll automation, depreciation etc. repetitive tasks via templetized general journal entries and that in turns helps me stay on top of what actually goes in a double-sided accounting, not wonder which menu for which category requires which subscription to achieve something more or less trivial.

 

To the point: SEP IRA is wholly employer covered; a few posts earlier in the thread inaccurately say otherwise.

 

As wholly employer covered SEP IRA should be totally written off the employer, but for sole proprietors the employer is the same as the employee.

 

There are two options here: the SEP IRA contribution to be classified as expense, effectively decreasing the company's profit; if so then it stands to reason its benefits to the employee's tax records have already played out for the sake of tax reporting and then the contribution may be reported in 1040, but not factored in for tax benefit (since it was already written down as business expense).


On the other hand, *if* in doing personal taxes there is a form that lets individuals specify tax-free contribution, thus effectively decreasing the tax they owe for the earned money, then it stands to reason that this amount should NOT be, at the same time, decreased from the company's profits, right?
You can't at the same time decrease your business revenue AND take personal write-off for the same transaction.

 

I do not know the law, but it seems to me that until 2019 IRS was requiring that SEP IRAs were written off as part of the personal revenue; if so then it stands to reason than the deduction in the business should be recorded as decrease of the equity and NOT as an operational expense.
I.e. it would be classified as shareholder distribution not affecting the business results for the year.

 

if in 2019 IRS has allowed SEP IRA to be recorded in the business report, then it should be changing the tax reporting requirements for SEP IRA at personal level.

 

In either case when it comes to QB recording it is a simple matter of creating a liability account for the contribution and then increasing liability at 12/31 against either retirement expense account OR against distributions/equity with subsequent decrease upon actual money transfer from bank (or cash) account.

 

It's a two entries journal record that doesn't need any extra plug-ins and subscriptions, unless those are tied to automated transaction classification for subsequent tax-reporting purposes.

 

I'd appreciate an "expert's" take on the above. I am advanced user, but definitely not an expert.

Thanks.

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Level 1

Recording a SEP IRA contribution in QBs

Hey Micah, 

 

I also pay the SEP directly from my business account and the transaction shows up in my banking detail. Did you just add it as Other current liabilities?

 

Thanks

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Level 1

Recording a SEP IRA contribution in QBs

I'm using the QuickBooks for the self-employed and do not see the option for what you are describing for reporting SEP IRA contributions. Please advise oh, thank you.

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