Hi quick q - while discussing with Claude it suggested using a sep-ira to counter-act the self-employment taxes due on #parsonage. Has anyone seen this as a strategy before?

Most people on parsonage don't have enough pre tax funds available to justify this, given how high traditional IRA limits and 403b limits are. But if those buckets are full then yeah this makes sense.

@mysterious-tomato-10057 I was thinking in addition to a 401k as a post December 31st option

What about the traditional ira

Please explain the idea. On the surface it sounds wrong because a SEP doesn't reduce self-employment taxes for actual self-employed people.

I think meaning just lowering overall tax obligation, not avoiding self employment taxes.

It can counteract income taxes, not self employment taxes. Like @mysterious-tomato-10057 said, most people on parsonage don't have high enough incomes for this to make sense for them. Regular IRA can be OK for smaller amounts. One thing that can counteract Self Employment taxes is claiming expenses. It's an obscure aspect of parsonage that many people are unaware of. Just like a self employed person, you can claim eligible expenses for a deduction.