TurboTax not letting me deduct full solo 401k contributions

Forum|Forum|2 years ago
February 19, 2024
2 replies
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I am amending my 2022 taxes Because I forgot to enter my solo 401k contributions, which was $48,093.

I am self-employed.

For 2022, per the IRS website, the employee deferral was increased to $20,500. The total limit was increased to $61,000. All of that is deductible.

I inputted $20,500 in elective deferrals, then $27,593 in employer matching (profit sharing) contributions.

But its only letting me deduct/defer the $20,500.

Why can I not deduct the remaining $27,593?

dmertz

Employee

Making a $27,593 employer contribution would require at least $148,455 of net profit from self-employment. Did you have at least that much profit? TurboTax allowing a deduction of only $20,500 suggests that you had only $22,059 of net profit.

dubstar23Author

My income was over $254,000.

There have been previous posts on this topic on this forum, but never saw resolution on how anyone got around it.

dmertz

Employee

Is your net profit from self-employment determined on Schedule C (or F) or is it coming from Box 14 of Schedule K-1 (Form 1065) with code A?

Examine the calculations on TurboTax's Keogh, SEP and SIMPLE Contribution Worksheet.

braider68

Hi Dubstar 23- I am having the same problem as yourself. Just posted this. I am only allowed to deduct $30,500 even though my wife put $76,500 into her Solo 401K. It is not allowing me to make the employer contribution just the employee contribution. Maybe there is a question down the line in the process where they ask for the "employer" portion? That is my question Here is my post.

According to my understanding of the IRS code for Solo 401(k), I should be able to deduct $30,500 ($23,000+ $7,500 my wife is over 50) as the "employee" of the Solo 401K. Secondly, I should be able to deduct another 25% of "compensation" as the "employer." According to the IRS, the maximum deduction is $69,000 + $7,500=$76,500 for 2024. My wife contributed this amount, is self employed, over 50 and her income level is high enough to justify this additional 25% deduction. Turbo Tax is limiting my deduction to $30,500. I have stopped at this point in the return. Does Turbo Tax at a later part in the process ask me for the "employer" deduction?? Will this total amount be on Schedule 1, Part II, line 16? Surely, TT will let us deduct more than $30,500 if there is sufficient income to allow for the further 25% deduction? Just wondering if this is later in the process or there is a glitch in the software, if so, I will take my business elsewhere as this is a large tax difference. Thanks for the help out there in advance.

RobertB4444

The employer portion should be entered on the business return in the employee benefits section.

@braider68

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dmertz

Employee

@RobertB4444 wrote:
The employer portion should be entered on the business return in the employee benefits section.

@braider68

That assumes that the business is an S corp or a C corp. Nowhere in the posts above is it mentioned that the business is an S corp. If it's not an S corp or a C corp, the deduction for the employer contribution is to be included as part of the self-employed retirement deduction on Schedule 1.

As I mentioned above, examine the Keogh, SEP and Simple Contribution Worksheet to see the calculation of the self-employed retirement deduction.