Get your taxes done using TurboTax

Your refund was likely reduced because based on your Self Employment Income, the amount allowable to be contributed to your Solo IRA was likely limited.

Click here for IRS Guidelines on Solo 401(k) Plans and the calculation of maximum deferral amount.

Per the IRS:

Contribution limits for self-employed individuals

You must make a special computation to figure the maximum amount of elective deferrals and non-elective contributions you can make for yourself. When figuring the contribution, compensation is your “earned income,” which is defined as net earnings from self-employment after deducting both:

• one-half of your self-employment tax, and
• contributions for yourself.

Use the rate table or worksheets in Chapter 5 of IRS Publication 560, Retirement Plans for Small Business, for figuring your allowable contribution rate and tax deduction for your 401(k) plan contributions. See also Calculating Your Own Retirement Plan Contribution.

Note: If all of your income comes from self-employment your taxable compensation is your business net profit.  Schedule 1, Line 3 less self-employment tax deduction which is on Line 15 of Schedule 1. 

TurboTax can calculate your maximum contribution for you.  

Once your self-employment income is entered:

• In your return, type SEPIRA contributions (use the whole phrase) in the Search box.
• Select the Jump to link at the top of the search results.
• This will take you to the Self-Employed Retirement Plans screen.
• Note: If you get a message "Self-Employed Retirement Plans are only for self-employed individuals", this means that you haven't entered your self-employed income.
• TurboTax will ask you whether you contributed to different types of retirement plans. Select Yes to Solo or Roth 401k.
• Check the box to Maximize Contribution to Individual 401k.
• Click Continue.

To make sure you properly entered your Solo 401(k) contributions in TurboTax click here.