It is my understanding that I can contribute up to 25% of my income into an IRA. It is 25% of gross income or 25% of profit (net of expenses)? Also, is the deadline for this 12/31 or do I have until 3/31/07?
2006-12-20 07:28:45 · 3 answers · asked by anonynonymous 1 in Business & Finance ➔ Taxes ➔ United States
PALADIN appears to be mistaken. You have until the tax filing deadline (April 16, 2007) to make a contribution to a retirement plan for this year. I am certain the plan must be set up before Dec 31. I couldn't find an answer to the other part of your question (25% of gross vs net), but I would bet net. That is the amount on which income tax is based and the closest match to employee gross income on which their limits are based.
2006-12-20 10:03:27 · answer #1 · answered by STEVEN F 7 · 0⤊ 1⤋
You have until 4/14/07 to set up an SEP Retirement Account (Self Employed Plan). I would recommend that you contact a bank or broker Charles Schwab, Merrill Lynch, Price Waterhouse, Scott Trade, etc) to discuss the best plan - Regular or Roth.
I believe that the max contribution is 25% of income.
2006-12-20 16:18:38 · answer #2 · answered by PALADIN 4 · 0⤊ 1⤋
you may contribute 25% of your net earned income to a SEP, but the maximum contribution amount for 2006 is $44,000.
also, you have until the filing deadline of your tax return (including extensions) to set up a SEP. which means you have until October 15, 2007 if you file for extensions.
this publication will give you all the info you need.
http://www.irs.gov/pub/irs-pdf/p560.pdf
2006-12-21 06:25:42 · answer #3 · answered by tma 6 · 0⤊ 0⤋