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Chapter 5 |
The table and the worksheets in chapter 5 apply only to self-employed
individuals who have only one defined contribution plan, such as a
profit-sharing plan. A SEP plan is treated as a profit-sharing plan. However, do
not use this worksheet for SARSEPs. |
Rate table for self-employed.(p22) |
Step 1 | |||||
Enter your net profit from line 31, Schedule C (Form 1040); line 3, Schedule C-EZ (Form 1040); line 36, Schedule F (Form 1040)*; or box 14, code A**, Schedule K-1 (Form 1065)* | |||||
*Reduce this amount by any amount reported on Schedule SE (Form 1040), line 1b. | |||||
**General partners should reduce this amount by the same
additional expenses subtracted from box 14, code A to determine the amount on line 1 or 2 of Schedule SE | |||||
Step 2 | |||||
Enter your deduction for self-employment tax from Form 1040, line 27 or your recalculated deduction for self-employment tax* | |||||
*If you did not take the self employed health insurance deduction (SEHID) on Form 1040, line 29, enter the amount from Form 1040, line 27. If you did take the SEHID, you must recalculate your deduction for self-employment tax using Schedule SE as a worksheet. When completing line 3, Short or Long Schedule SE, treat the amount from Form 1040, line 29 as zero. | |||||
Step 3 | |||||
Net earnings from self-employment. Subtract step 2 from step 1 | |||||
Step 4 | |||||
Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed | |||||
Step 5 | |||||
Multiply step 3 by step 4 | |||||
Step 6 | |||||
Multiply $245,000 by your plan contribution rate (not the reduced rate) | |||||
Step 7 | |||||
Enter the smaller of step 5 or step 6 | |||||
Step 8 | |||||
Contribution dollar limit | $49,000 | ||||
• | If you made any elective deferrals to your self-employed plan, go to step 9. | ||||
• | Otherwise, skip steps 9 through 20 and enter the smaller of step 7 or step 8 on step 21. | ||||
Step 9 | |||||
Enter your allowable elective deferrals (including designated Roth contributions) made to your self-employed plan during 2010. Do not enter more than $16,500 | |||||
Step 10 | |||||
Subtract step 9 from step 8 | |||||
Step 11 | |||||
Subtract step 9 from step 3 | |||||
Step 12 | |||||
Enter one-half of step 11 | |||||
Step 13 | |||||
Enter the smallest of step 7, 10, or 12 | |||||
Step 14 | |||||
Subtract step 13 from step 3 | |||||
Step 15 | |||||
Enter the smaller of step 9 or step 14 | |||||
• | If you made catch-up contributions, go to step 16. | ||||
• | Otherwise, skip steps 16 through 18 and go to step 19. | ||||
Step 16 | |||||
Subtract step 15 from step 14 | |||||
Step 17 | |||||
Enter your catch-up contributions (including designated Roth contributions), if any. Do not enter more than $5,500 | |||||
Step 18 | |||||
Enter the smaller of step 16 or step 17 | |||||
Step 19 | |||||
Add steps 13, 15, and 18. | |||||
Step 20 | |||||
Enter the amount of designated Roth contributions included on lines 9 and 17. | |||||
Step 21 | |||||
Subtract step 20 from step 19. This is your maximum deductible contribution. | |||||
Next: Enter your actual contribution, not to exceed your maximum deductible contribution, on Form 1040, line 28. |
Rate worksheet for self-employed.(p22) |
1) | Plan contribution rate as a decimal (for example, 101/2% = 0.105) | |
2) | Rate in line 1 plus 1 (for example, 0.105 + 1 = 1.105) | |
3) | Self-employed rate as a decimal rounded to at least 3 decimal places (line 1 ÷ line 2) (for example, 0.105 ÷ 1.105 = 0.095) |
Figuring your deduction.(p23) |
Community property laws.(p23) |
Step 1 | |||||
Enter your net profit from line 31, Schedule C (Form 1040); line 3, Schedule C-EZ (Form 1040); line 36, Schedule F (Form 1040)*; or box 14, code A**, Schedule K-1 (Form 1065)* | $200,000 | ||||
*Reduce this amount by any amount reported on Schedule SE (Form 1040), line 1b. | |||||
**General partners should reduce this amount by the same
additional expenses subtracted from box 14, code A to determine the amount on line 1 or 2 of Schedule SE | |||||
Step 2 | |||||
Enter your deduction for self-employment tax from Form 1040, line 27 or your recalculated deduction for self-employment tax* | 9,300 | ||||
*If you did not take the self employed health insurance deduction (SEHID) on Form 1040, line 29, enter the amount from Form 1040, line 27. If you did take the SEHID, you must recalculate your deduction for self-employment tax using Schedule SE as a worksheet. When completing line 3, Short or Long Schedule SE, treat the amount from Form 1040, line 29 as zero. | |||||
Step 3 | |||||
Net earnings from self-employment. Subtract step 2 from step 1 | 190,700 | ||||
Step 4 | |||||
Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed | 0.078 | ||||
Step 5 | |||||
Multiply step 3 by step 4 | 14,875 | ||||
Step 6 | |||||
Multiply $245,000 by your plan contribution rate (not the reduced rate) | 20,825 | ||||
Step 7 | |||||
Enter the smaller of step 5 or step 6 | 14,875 | ||||
Step 8 | |||||
Contribution dollar limit | $49,000 | ||||
• | If you made any elective deferrals to your self-employed plan, go to step 9. | ||||
• | Otherwise, skip steps 9 through 20 and enter the smaller of step 7 or step 8 on step 21. | ||||
Step 9 | |||||
Enter your allowable elective deferrals (including designated Roth contributions) made to your self-employed plan during 2010. Do not enter more than $16,500 | N/A | ||||
Step 10 | |||||
Subtract step 9 from step 8 | |||||
Step 11 | |||||
Subtract step 9 from step 3 | |||||
Step 12 | |||||
Enter one-half of step 11 | |||||
Step 13 | |||||
Enter the smallest of step 7, 10, or 12 | |||||
Step 14 | |||||
Subtract step 13 from step 3 | |||||
Step 15 | |||||
Enter the smaller of step 9 or step 14 | |||||
• | If you made catch-up contributions, go to step 16. | ||||
• | Otherwise, skip steps 16 through 18 and go to step 19. | ||||
Step 16 | |||||
Subtract step 15 from step 14 | |||||
Step 17 | |||||
Enter your catch-up contributions (including designated Roth contributions), if any. Do not enter more than $5,500 | |||||
Step 18 | |||||
Enter the smaller of step 16 or step 17 | |||||
Step 19 | |||||
Add steps 13, 15, and 18. | |||||
Step 20 | |||||
Enter the amount of designated Roth contributions included on lines 9 and 17 | |||||
Step 21 | |||||
Subtract step 20 from step 19. This is your maximum deductible contribution | $14,875 | ||||
Next: Enter your actual contribution, not to exceed your maximum deductible contribution, on Form 1040, line 28. |
Column A If the plan contri- bution rate is: (shown as %) | Column B Your rate is: (shown as decimal) |
1 | .009901 |
2 | .019608 |
3 | .029126 |
4 | .038462 |
5 | .047619 |
6 | .056604 |
7 | .065421 |
8 | .074074 |
9 | .082569 |
10 | .090909 |
11 | .099099 |
12 | .107143 |
13 | .115044 |
14 | .122807 |
15 | .130435 |
16 | .137931 |
17 | .145299 |
18 | .152542 |
19 | .159664 |
20 | .166667 |
21 | .173554 |
22 | .180328 |
23 | .186992 |
24 | .193548 |
25* | .200000* |
*The deduction for annual employer contributions (other than elective deferrals) to a SEP plan, a profit-sharing plan, or a money purchase plan cannot be more than 20% of your net earnings (figured without deducting contributions for yourself) from the business that has the plan. |
1) | Plan contribution rate as a decimal (for example, 101/2% = 0.105) | 0.085 |
2) | Rate in line 1 plus 1 (for example, 0.105 + 1 = 1.105) | 1.085 |
3) | Self-employed rate as a decimal rounded to at least 3 decimal places (line 1 ÷ line 2) (for example, 0.105 ÷ 1.105 = 0.095) | 0.078 |
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