SEP IRA?

[TheBeeKeeper]

I have a small sole-proprietor business, netting about 15k/year
Both my spouse and I are employed full time, and max our 401K's

from what I understand SEP is only 25% of net business income
Do we have any other vehicles for reducing our tax liability?

We don't do HSA because our family's medical expenses are high , and the employer-based health PPO plan covers everything with no deductibles
 

[dandarc]

When you say "Max our 401Ks", do you mean 18K per year each (plus catch up if you're 50 or over)?  If you're less than that on the employee deferrals, an individual 401K would let you defer more than a SEP on 15K of income.  If you're meeting the IRS limit at work, then you can defer just as much with a SEP as an i401K.

SEP / employer side of i401K is going to be 20% of (net business income less 1/2 self employment tax).

Do either of you work for government?  If so, you may have a 457 plan available in addition to a 401K.  Other than that, you can cover certain expenses (health, childcare, transit, probably a few others) through FSAs if your employer offers that.

Depending on your income, you might be able to deduct some or all of a traditional IRA.

So, read that benefits packet.

[TheBeeKeeper]

When you say "Max our 401Ks", do you mean 18K per year each (plus catch up if you're 50 or over)?  If you're less than that on the employee deferrals, an individual 401K would let you defer more than a SEP on 15K of income.  If you're meeting the IRS limit at work, then you can defer just as much with a SEP as an i401K.

SEP / employer side of i401K is going to be 20% of (net business income less 1/2 self employment tax).

Do either of you work for government?  If so, you may have a 457 plan available in addition to a 401K.  Other than that, you can cover certain expenses (health, childcare, transit, probably a few others) through FSAs if your employer offers that.

Depending on your income, you might be able to deduct some or all of a traditional IRA.

So, read that benefits packet.

yes, max means the full 18K
No government, so no 457
Maxing FSAs for health and child care expenses

[dandarc]

Well, assuming your income is too high to deduct tIRA, then a SEP-IRA and not much else I can think of after that.

Do you itemize or take the standard deduction?  Depending on how large things like charitable donations and property taxes are, you can possibly eek out a few more thousand in deductions by paying certain things in January and December in odd years and no payments in even years.  In odd years, you itemize, even years take standard deduction.

[TheBeeKeeper]

Well, assuming your income is too high to deduct tIRA, then a SEP-IRA and not much else I can think of after that.

Do you itemize or take the standard deduction?  Depending on how large things like charitable donations and property taxes are, you can possibly eek out a few more thousand in deductions by paying certain things in January and December in odd years and no payments in even years.  In odd years, you itemize, even years take standard deduction.

good ideas, thanks!

[SeattleCPA]

I have a small sole-proprietor business, netting about 15k/year
Both my spouse and I are employed full time, and max our 401K's

from what I understand SEP is only 25% of net business income
Do we have any other vehicles for reducing our tax liability?

We don't do HSA because our family's medical expenses are high , and the employer-based health PPO plan covers everything with no deductibles

For a sole proprietorship, and maybe someone else mentioned this already and I didn't see, the percentage is 20% roughly and not 25%.

I.e., you can do $3K on $15K of profit.

BTW, people throw around both 20% and 25% and they're really the same number for a sole proprietor or partner. Because the 25% contribution is applied to the business income after you deduct the contribution. E.g., $3K is 25% of the $15K profit once you deduce the $3K from the profit.