Can I contribute to solo 401K if my net self-employed income from two business is negative but one of them has profit.
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
mszhang
New Member

Can I contribute to solo 401K if my net self-employed income from two business is negative but one of them has profit.

The solo 401K is opened for one business with profit taxed as sole proprietorship. The other business has two owners (myself and my friend (not spouse)) is taxed as LLC partnership. This LLC-partnership has loss

1 Reply
SherylSTaxExpert
Level 3

Can I contribute to solo 401K if my net self-employed income from two business is negative but one of them has profit.

If you have a net loss from your self-employed income, you would not be eligible to contribute. The IRS rules state that you are allowed to contribute a maximum of 25% of your profit from net earnings from self-employment income.  

The allowable deduction is based on your self-employment tax. If you have a net loss there would be no self-employment tax and therefore no basis to calculate your deduction. 

For more information please see the link below.

Click here

[Edited 2.12.19, 2:41pm EST]

Dynamic AdsDynamic Ads
v
Privacy Settings