I hope this gets in front of a TurboTax software engineer...
My SE income in 2023 was $24,210. So my SE tax is calculated by taking 92.35% of that, rounded, or $22,358, and then calculating 12.4% and 2.9% of that, both values rounded, then summed, which yields $2,772 and $648 for a total of $3,420. Thus my 1/2 SE Tax deduction is 1/2 of that, or $1,710. As a result, my maximum allowable Individual 401(k) contribution should be $24,210 - $1,710 = $22,500! However, TurboTax is calculating my maximum allowable contribution as only $22,499! Grrr!
I discovered on the Keogh, SEP and SIMPLE Contribution Worksheet in Part III, Line 2a that the value of the "Deductible portion of self-employment tax" was $1,711! One dollar off. This may or may not be related, but I'm guessing somewhere in the bowels of the TurboTax code, something is being rounded early. My guess is someone is taking the 92.35% value, and multiplying it by 15.3% and rounding just once, yielding $3,421, and when taking half of that, $1,710.50 gets rounding to $1,711 when they calculate the SE Tax deduction. The irony is that Schedule SE has it right, but somewhere else it's wrong, which is impacting the max Individual 401(k) contribution. Help!
