The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: definition of self-employed?||Date: 12/17/1997 7:09 PM|
|Author: TMFTaxes||Number: 930 of 121351|
<<That's right - my university work was standard payroll and the contract work was 1099. What I
was actually asking (and I probably didn't phrase it properly) is, does the contract work allow me
to invest in an SEP IRA? I am assuming that, with an SEP IRA, I can deduct more than $2000 of
my 1997 IRA contribution.>>
Right...you will be eligible for a SEP contribution. But that SEP contribution will be based upon the NET earnings from your Schedule C business. Remember that SEP contributions are limited to 13.0435% of your net Sch C income. So if your net Sch C income amounts to $10k, your maximum SEP contribution would only amount to $1,304.
In that case, an IRA may be your better bet. But also remember that, depending upon your specific siuation and income levels, it is possible for you to have BOTH an IRA and a SEP.
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