I’m getting serious-sounding calls from someone who claims to represent the IRS, insisting my social security number is compromised. Should I trust this?
No, no and no! The IRS will typically send you a letter, and usually only after they receive a suspicious tax return filed with your social security number or after you file and they flag your return as a duplicate. The Federal Trade Commission recommends that you call the IRS using the telephone number given in the letter. You’ll need the letter and a copy of your prior year’s tax return when you call to help verify your identity. Get more information at www.identitytheft.gov.
I contributed to a Simplified Employee Pension (SEP) as a self-employed individual for the first time this year and heard there is a special formula for deducting contributions on my tax return. What is it?
If you have a SEP-IRA, you can contribute up to 25% of compensation, up to $56,000 in tax year 2019. However, you’ll need to make a special computation if you are self-employed. To find your maximum contribution you’ll first need to deduct your contributions from income. Many SEP providers offer an online calculator to help you figure this out, and your tax professional can help you do the same.