SIMPLE IRA

[mdmcfarland]

I have a tax client with a Schedule C showing a net income of $40,797. Taxpayer is 73 and spouse is 66. Spouse is employee. The information he has given us says that they made a SIMPLE IRA contribution of $13,000 for himself and $11,000 for his spouse.

Wife's W2 income is $11,049. Her W2 income all goes toward her SIMPLE IRA.

Are these limits okay? And how is all of it reported on the tax return? He is our only client that does this and when we try to research it, we don't seem to come up with the answer.

[lbbwest]

I have a tax client with a Schedule C showing a net income of $40,797. Taxpayer is 73 and spouse is 66. Spouse is employee. The information he has given us says that they made a SIMPLE IRA contribution of $13,000 for himself and $11,000 for his spouse.

Wife's W2 income is $11,049. Her W2 income all goes toward her SIMPLE IRA.

Are these limits okay? And how is all of it reported on the tax return? He is our only client that does this and when we try to research it, we don't seem to come up with the answer.

Please see Pub 560 Chapter 3. I may be getting lost in terminology but at first blush what you posted does not appear to meet the criteria of a Simple IRA, which is a Salary REDUCTION matched either dollar by dollar up to 3% of Gross Pay (see additional criteria) or a Salary Reduction with a 2% of Gross Pay to all employees. Look at what has previously been reported, (e.g. W2) how contributions were made etc. lbb