Information Given -
Hope is a self-employed taxpayer who turns 54 years old at the end of the year (2019).
In 2019, her net Schedule C income was $130000. This was her only source of income.
.
(a) -- She sets up a SEP IRA.
Answer -
As per U.S. Internal Revenue Service, for 2019, a self-employed business owner can contribute 20% of Earnings from self employment in a SEP IRA, not to exceed the maximum contribution limit of $56000.
In the given case, Hope's contribution to SEP IRA is $24011.
Computed as follows:
A. |
Earnings from self employment = (92.35% of net schedule C income) = 92.35% * $130000 = $120055 20% of Earnings from self employment - = 20% * $120055 = $24011 |
$24011 |
B. | Maximum contribution limit | $56000 |
Hope's contribution to SEP IRA = Lesser of (A) or (B) |
$24011 | |
.
(b) -- She sets up an individual 401(k).
Answer -
As per U.S. Internal Revenue Service, The maximum amount a self-employed individual can contribute to 401(k) for 2019 is $56000. An Individuals 50 and older can add an extra $6000 per year in "catch-up" contributions, bringing the total to $62000.
In the given case, Hope is 54 years old.
Therefore, The maximum amount that Hope may contribute to 401(k) = ($56000+$6000) = $62000.
Required information [The following information applies to the questions displayed below.] Hope is a self-employed taxpayer...
Required information [The following information applies to the questions displayed below.] Hope is a self-employed taxpayer who turns 54 years old at the end of the year (2019). In 2019, her net Schedule C income was $130,000. This was her only source of income. This year, Hope is considering setting up a retirement plan. What is the maximum amount Hope may contribute to the self-employed plan in each of the following situations? (Round your intermediate calculations and final answers to...
Required information [The following information applies to the questions displayed below.] Hope is a self-employed taxpayer who turns 54 years old at the end of the year (2019). In 2019, her net Schedule C income was $130,000. This was her only source of income. This year, Hope is considering setting up a retirement plan. What is the maximum amount Hope may contribute to the self-employed plan in each of the following situations? (Round your intermediate calculations and final answers to...
Required information [The following information applies to the questions displayed below.) Hope is a self-employed taxpayer who turns 54 years old at the end of the year (2019). In 2019, her net Schedule C income was $130,000. This was her only source of income. This year, Hope is considering setting up a retirement plan. What is the maximum amount Hope may contribute to the self-employed plan in each of the following situations? (Round your intermediate calculations and final answers to...
Required information [The following information applies to the questions displayed below.) Hope is a self-employed taxpayer who turns 54 years old at the end of the year (2019). In 2019, her net Schedule C income was $130,000. This was her only source of income. This year, Hope is considering setting up a retirement plan. What is the maximum amount Hope may contribute to the self-employed plan in each of the following situations? (Round your intermediate calculations and final answers to...
Required information [The following information applies to the questions displayed below.) Hope is a self-employed taxpayer who turns 54 years old at the end of the year (2019). In 2019, her net Schedule C income was $130,000. This was her only source of income. This year, Hope is considering setting up a retirement plan. What is the maximum amount Hope may contribute to the self-employed plan in each of the following situations? (Round your Intermediate calculations and final answers to...
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