Profit Sharing Plan Payment Detail

[miatax]

Quick and easy question re: PSP Payment for 2008

Salaries = $165,871.19

Client paid the estimated amount of $16,500 (10%) back in January. Do I recommend to write a check to the plan for $87.12 or is it acceptable the way it is and report the $16,500 on the 1120 and the 5500 (obviously the same figure will be on both returns).

Thanks.

[miatax]

I've had this on hold, but I think I will tell my client to write another check to the plan for the $87.12.

Let me know what anyone thinks... ???

[Lion EA]

Tell him the max he can contribute and ask him what he's going to do. I have a couple of clients who like nice round numbers and would never add the extra $87.12 and others who would go up to the max. It's their decision.

[miatax]

Thanks Lion! He'll definitely go for the max. Only thing is that he wrote the amount based on our year end estimates back in January instead of the whole amount by mistake.... thanks.

[Lion EA]

I also suggest an estimated, conservative amount early -- to get their investment working for them. Then, when I complete the return, I can give them the exact maximum contribution.