Don't overlook these!
Updated for 2012
Compensation for an employee is normally the employee's salary, commissions, bonuses, and other income earned on the job.
However, compensation for employees generally does not include the employer's contribution to the employee's SEP-IRA.
In other words, your contributions as the employer to an employee's SEP-IRA are not added of the employee's gross pay.
For SEP (and qualified) plans, a self-employed person's compensation is net earnings from self-employment, which equals:
Only gross income where personal services rendered were a material income-producing factor are included in determining net earnings from self-employment; not passive income earned merely as an investor.
Allowable business deductions:
In addition to ordinary and necessary expenses, allowable business deductions also includes:
Reminder: Contributions to your own SEP-IRA are not deducted from income from your trade or business on Schedule C (of F). Your deduction is entered on Form 1040, line 28.
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