excess sep contrib after amending 1040

[Guest carla]

I'm amending a client's sch C, but now there's an excess SEP contribution. What is the proper way to correct this and will the excess be subject to a penalty? Thanks for the help.

[Gary Lesser]

Generally, the excess caused by insufficient EI is treated as reported earned income (taxed). Thus, it isn't deducted. In your case it was deducted. Assuming the due date has passed, it would seem that the 10 percent penalty would apply (See Form 5330).

Doesn't appear too large a penalty would result so as to justify anything more than a routine penalty abatement request (not that anything other than VCP comes to mind, but I don't see that VCP would accomplish much and probably be more costy than the penalty) attached to the return.