TurboTax's correctly implements the Deduction Worksheet for Self-Employed from Chapter 5 of IRS Pub 560. What TurboTax fails to do well is communicate to the user the permitted amount of employee and employer contributions. $27,000 is the maximum employee elective deferral for someone age 50 or over in 2022 ($20,500 regular elective deferral plus the $6,500 catch-up deferral. The rest of your permissible contribution is the employer contribution which TurboTax does determine when you mark the Maximize box. Examine the Keogh, SEP and SIMPLE Contribution Worksheet for a better understanding of what TurboTax is allowing as the self-employed retirement deduction when you mark the Maximize box for a 401(k).
