Calculate Reduced Earned Income for Self Employed Individuals with Schedule C.

For retirement plans of self employed individuals need to calculate their reduced earned income to determine contribution limits. In general, this is their profit for the year reduced by contributions allocated to themselves and their deduction for their self-employment tax. This page is to help with determining with this reduced earned income for individuals that have defined benefit and defined contribution retirement plans. It assumes the DB liability for the owner is not dependent on this year's pay. If it does, cycle results with pension software until results stabilize. This calculator doesn’t cover all possibilities of plan designs and situations. Review with the signing enrolled actuary and CPA to ensure results are appropriate. Refer to the code links for self employed reduced earned income requirements.

Year's Inputs

Self Employed Individual

Year

Taxable Wage Base for Social Security

DB Contribution Allocation Method Allocated to Current and Prior Accrued Liability Allocated First to Current Accrual then Previouly Accrued Liability Allocated Only to Current Accrual Liability

DB Liability Type IRC 404 - Max Deductions IRC 430 - Minimum Contribution Required Alternative Method Cash Balance Accounts or Lump Sum Values

Company Level Inputs

Schedule C - Draft

Preliminarily Line 31. Net profit or (loss).

DC 404 Rank & File Contributions.

DB Contributions from Proprietor

DB Rank & File Prior Accrued Liaibility

DB Rank & File Current Accrual Liability

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DC Contributions to and the DB Liability of the Self Employed Individual

Self Employed's DC 404 Contributions

401(k) Contributions to Owner

Roth Contributions to Owner

Eligible for Catch-up Not Eligible for Catch-up

Self Employed's Prior Accrued Liability

Self Employed's Current Accrual Liaibliity

Other W-2 Income of Self Employed Individual

W-2

Box 3. Social Security Wages

Box 7. Social Security Tips

Generate Reduced Earned Income Worksheet