SEP IRA contribution calculator recommendations - what's most accurate?

Thanks for breaking it down! I guess my confusion comes from whether to calculate based on gross income or net income after business expenses. Some calculators seem to use different approaches. Also, is that 25% limit before or after I account for the SEP contribution itself? I've seen some formulas that use 20% instead of 25% because of some adjustment factor.

You always use your net business income (after expenses) from Schedule C - that's your starting point. And you're right to be confused about the 25% vs 20% thing - this trips up a lot of people. For sole proprietors, there's actually an adjustment that effectively reduces the 25% to about 20% of your Schedule C net profit. This happens because the contribution itself reduces the self-employment income it's based on (circular calculation). That's why some calculators use the simplified 20% of Schedule C net approach - it gets you to roughly the same place without the complex formula.

Does it work if you have both W-2 income and self-employment income? My situation is a bit complicated because I have a day job plus freelance work, and I'm trying to figure out how much I can put in my SEP IRA from just the freelance portion.

I'm skeptical about these tax tools. How can you be sure the calculation is actually correct? I've been burned before by online calculators that didn't account for all the special rules and exceptions.

It absolutely handles mixed income sources! That's actually one of the reasons I started using it. You can enter both your W-2 earnings and your self-employment income, and it calculates the SEP IRA limit based just on your qualified self-employment earnings. It even helps you navigate contribution limits if you also have a 401(k) at your day job. For your skepticism question - I totally get that. What convinced me was that they show the exact tax code references and calculation steps, so you can verify everything yourself. I actually compared their calculations to what my CPA did manually and they matched exactly. They seem to update whenever tax laws change too.

Wait, this actually works? I thought it was impossible to get through to the IRS these days. How exactly does this service get you to the front of the line? I've literally tried calling about my SEP IRA calculation 5 times and gave up each time after being on hold for over an hour.

Sounds sketchy to me. Why would I pay someone to call the IRS when I can do it myself for free? And how do they actually get you through faster? The IRS phone system is the same for everyone. This seems like a scam targeting frustrated taxpayers.

The service uses an automated system that navigates the IRS phone tree and waits on hold for you. When an agent finally picks up, it calls your phone and connects you directly to them. I was skeptical too, but it saved me hours of holding time. For your question about why pay - it's simply about time value. I spent over 3 hours on three separate days trying to get through without success. Using this service, I was connected in about 20 minutes while I continued working. For me, not wasting half a day on hold was absolutely worth it.

I tried the Vanguard one but got confused by some of the terminology they use. Does anyone know if the SE income they ask for is before or after business expenses? And do these calculators account for that reduction factor people mentioned above?

The SE income they ask for is your net profit from Schedule C - so that's after all your business expenses. And yes, both Vanguard and Fidelity's calculators do account for the reduction factor - they're calculating the actual 25% of your compensation after adjustments, not the simplified 20% rule of thumb. Most people get confused because the true formula is a bit circular (since your contribution impacts the base it's calculated on), but these big financial institutions have accurate calculators. Just make sure you're entering your net profit from self-employment, not your gross receipts!

Could you maybe explain how the circular calculation actually works? I've been trying to understand it but getting confused. Is it because the SEP contribution itself reduces the income that the 25% is based on?