A SEP-IRA contribution for an employee belongs on Line 19, pension and profit-sharing plans.
Why line 19
Line 19 is for what the business puts into a retirement plan for the people it employs, and a SEP-IRA contribution made for a worker you employ is exactly that. The deduction belongs to the business, so it reduces net profit and with it self-employment tax. The contribution you make for yourself out of the same plan does not go here, it is a personal deduction on Schedule 1.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a SEP-IRA contribution for an employee lands on Line 19 without you sorting it.
Start for freeWhat a SEP-IRA contribution for an employee is confused with
- Schedule 1 line 16, schedule 1 line 16, self-employed retirement plans
- Your own contribution as the owner, even under the same SEP plan, goes on Schedule 1 line 16 and never on line 19, which is employees only.
- Line 26, wages
- Line 26 is wages paid to employees, so the cash wage goes on line 26 and the retirement contribution on top of it goes on line 19.
Examples that belong on line 19
- $4,500 contributed to a SEP-IRA for one full time employee earning $50,000
- $2,750 contributed across two part time employees at the same uniform percentage
- $1,200 contributed for an employee hired mid year who met the plan's eligibility rules
- $0 contributed for a worker who did not meet the plan's age and service requirements
What does not belong here
- Your own SEP-IRA contribution as the owner, which is a Schedule 1 deduction.
- Contributions for an independent contractor, who is not your employee and funds their own plan.
- The part of the plan total attributable to you, which has to be split out before anything reaches line 19.
The limit that applies
A SEP uses the same contribution percentage for everyone eligible, the owner included, so a contribution for employees almost always comes with one for you, and the two parts are reported on different lines.
What to keep
Keep the SEP adoption agreement, the contribution calculation per employee, and the custodian statements showing the deposits and their dates. Keep the split between the owner's share and the employees' share in writing, because that split is what the two lines turn on.
Other expenses on line 19
| Expense | Line |
|---|---|
| a 401(k) employer contribution for an employee | Schedule C, Line 19 |
| a retirement plan administration fee | Schedule C, Line 19 |
| a SIMPLE IRA employer match for an employee | Schedule C, Line 19 |
Related lookups
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a SEP-IRA contribution for an employee lands on Line 19 without you sorting it.
Start for free