Contributions and Deductions 
Table and Worksheets for the Self-Employed
If you are self-employed, you must use the following rate table or rate worksheet and deduction worksheet to figure your deduction for contributions you made for yourself to a SEP-IRA or qualified plan. First, use either the rate table or rate worksheet to find your reduced contribution rate. Then complete the deduction worksheet to figure your deduction for contributions.

Rate table for self-employed. If your plan’s contribution rate is a whole percentage (for example, 12% rather than 12.5%), you can use the following table to find your reduced contribution rate. Otherwise, use the rate worksheet provided later. First, find your plan contribution rate (the contribution rate stated in your plan) in Column A of the table. Then read across to the rate under Column B. Enter the rate from Column B in step 1 of the Deduction Worksheet for Self-Employed.

Rate Table for Self-Employed	
			
Column A	Column B	
If the plan contri-		Your	
bution rate is:		rate is:	
(shown as %)	(shown as decimal)	
1 . . . . . . . . . . . . . .		.009901	
2 . . . . . . . . . . . . . .		.019608	
3 . . . . . . . . . . . . . .		.029126	
4 . . . . . . . . . . . . . .		.038462	
5 . . . . . . . . . . . . . .		.047619	
6 . . . . . . . . . . . . . .		.056604	
7 . . . . . . . . . . . . . .		.065421	
8 . . . . . . . . . . . . . .		.074074	
9 . . . . . . . . . . . . . .		.082569	
10 . . . . . . . . . . . . .		.090909	
11 . . . . . . . . . . . . .		.099099	
12 . . . . . . . . . . . . .		.107143	
13 . . . . . . . . . . . . .		.115044	
14 . . . . . . . . . . . . .		.122807	
15 . . . . . . . . . . . . .		.130435	
16 . . . . . . . . . . . . .		.137931	
17 . . . . . . . . . . . . .		.145299	
18 . . . . . . . . . . . . .		.152542	
19 . . . . . . . . . . . . .		.159664	
20 . . . . . . . . . . . . .		.166667	
21 . . . . . . . . . . . . .		.173554	
22 . . . . . . . . . . . . .		.180328	
23 . . . . . . . . . . . . .		.186992	
24 . . . . . . . . . . . . .		.193548	
25* . . . . . . . . . . . . .		.200000*	
*The deduction for annual employer contributions (other than elective deferrals) to a SEP plan, profit-sharing plan, or a money purchase plan cannot be more than 20% of your net earnings (figured without deducting contributions for yourself) from the business that has the plan. If the plan is a money purchase pension plan, the deduction is limited to 20% of your net earnings.

Example. You are a sole proprietor and have employees. If your plan’s contribution rate is 10% of a participant’s compensation, your rate is 0.090909. Enter this rate in step 1 of the Deduction Worksheet for Self-Employed. 

Rate worksheet for self-employed. If your plan’s contribution rate is not a whole percent- age (for example, 10.5%), you cannot use the Rate Table for Self-Employed. Use the following worksheet instead. 

Rate Worksheet for Self-Employed	
			
1) Plan contribution rate as a decimal	
(for example, 101/2% = 0.105)	________	
2) Rate in line 1 plus 1 (for example,	
0.105 + 1 = 1.105) . . .		________	
3) Self-employed rate as a decimal	
rounded to at least 3 decimal places	
(line 1 ¸ line 2) . . . . . .		________	

Figuring your deduction. Now that you have your self-employed rate from either the rate table or rate worksheet, you can figure your maximum deduction for contributions for yourself by completing the following worksheet. 

If you reside in community property state and you are married and filing a separate return, disregard community property laws for step 1 of the following worksheet. In step 1, enter the total net profit you actually earned.

Deduction Worksheet for Self-Employed	
	
Step 1	
Enter your net earnings (net profit) from line 31, Schedule C (Form 1040); line 3, Schedule C–EZ	
(Form 1040); line 36, Schedule F (Form 1040); or line 15a, Schedule K–1 (Form 1065) . . . . . . . . .        _____________	
Step 2	
Enter your deduction for self-employment tax from line 29, Form 1040 . . . . . . . . . . . . . . . . . . . . . .         _____________	
Step 3	
Subtract step 2 from step 1 and enter the result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      _____________	
Step 4	
Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed . . . .        _____________	
Step 5	
Multiply step 3 by step 4 and enter the result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 6	
Multiply $200,000 by your plan contribution rate (not the reduced rate) . . . . . . . . . . . . . . . . . . . . . .        _____________ 	
Step 7	
Enter the smaller of step 5 or step 6  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 8	
Contribution dollar limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        __$40,000_____	
If you made any elective deferrals, go to step.	
Otherwise, skip steps 9 through 18 and enter the smaller of step 7 or step 8 on step 19.	
Step 9	
Enter your allowable 2002 elective deferrals ($11,000 maximum)  . . . . . . . . . . . . . . . . . . . . . . . . . .      _____________	
Step 10	
Subtract step 9 from step 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 11	
Subtract step 9 from step 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 12	
Enter one-half of step 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 13	
Enter the smallest of steps 7, 10, or 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 14	
Subtract step 13 from step 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 15	
Enter the smaller of step 9 or step 14  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
If you made catch-up contributions, go to step 16.	
Otherwise, skip steps 16 through 18 and go to step 19.	
Step 16	
Subtract step 15 from step 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 17	
Enter your catch-up contributions ($1,000 maximum) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 18	
Enter the smaller of step 16 or step 17  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        _____________	
Step 19	
Enter the lesser of step 5 or step 6. This is your maximum deductible contribution. . . . . . . . . . .        _____________	
Enter your deduction on line 31, Form 1040 	
	
Example
You are a sole proprietor and have employees. The terms of your plan provide that you contribute 8.5 % (.085) of your compensation and 8.5% of your participants’ compensation. Your net profit from line 31, Schedule C
(Form 1040) is $200,000. In figuring this amount, you deducted your common-law employees’ compensation of $100,000 and contributions for them of $8,500 (8.5 % x $100,000). Your self-employment tax deduction on line 29 of Form 1040 is $7,942. You figure your self-employed rate and maximum deduction for employer contributions you made for yourself as follows.	
	
Sample Rate Worksheet for Self-Employed	
1)	Plan contribution rate as a decimal (for example, 101/2% = 0.105) . . . . 0.085	
2)	Rate in line 1 plus 1 (for example, 0.105 + 1 = 1.105) . . . . . . . . . . . . . 1.085	
3)	Self-employed rate as a decimal rounded to at least 3 decimal 	
                                                                places (line 1 ¸ line 2) . .  . . . . . . . . . . . 0.078	
	
Sample Deduction Worksheet for Self-Employed	
	
Step 1	
Enter your rate from the Rate Table for Self-Employed or Rate Worksheet for Self-Employed . .  . . .  . . . . .  0.078	
Step 2	
    Enter your net earnings (net profit) from line 31, Schedule C (Form 1040); line 3, Schedule C–EZ (Form	
1040); line 36, Schedule F (Form 1040); or line 15a, Schedule K–1 (Form 1065) . . . . . . . . . .  . . . . . . . . . . $200,000	
Step 3	
Enter your deduction for self-employment tax from line 29, Form 1040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7,942	
Step 4	
Subtract step 3 from step 2 and enter the result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  192,058	
Step 5	
Multiply step 4 by step 1 and enter the result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14,981	
Step 6	
Multiply $200,000 by your plan contribution rate (.085). Enter the result but not more than $40,000  . . . . .  17,000	
Step 7	
    Enter the lesser of step 5 or step 6. This is your maximum deductible contribution.	
    Enter your deduction on line 29, Form 1040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 14,981