Q: Can I write off contributions to my IRA if I own my own business?
I own my own business (Subchapter "S" corp) based in California. I pay myself with either a distribution or via regular paycheck and generate a W2 for myself at the end of the year. I want to contribute to my existing personal 401k (rollover) account and be able to write off the contribution on my taxes as allowed by law. I have been getting mixed answers as to whether this is allowed in my situation. Some say that the 401k has to be company owned (like a profit sharing plan) others say yes it can be my personal 401k. Thank you for any clarifications!
A: 401(K) and SEP-IRA will be funded and deducted by the S corporation. Regular IRA would be deducted on the 1040 form your earned income, not from K-1 distribution. Whether you can take regular IRA, you should ask the tax preparer, because it is based on the figures on the 1040. The information presented herein is for general purposes only. It is not intended for, and may not be construed as legal, tax, or accounting advice, or business solicitation. For specific advice, please consult a tax attorney in person. Good luck. Zaher Fallahi, Tax Attorney, CPA (California).
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