I am a solo business owner with an individual 401(K) retirement plan. Why does adding employer matching contribution to Turbotax not bring down my federal tax due?

[rulamo]

Since I am the employer and am making a contribution from my business income shouldn't this reduce my taxable income?

[RobertB4444]

If you are an employer and you are making contributions to the 401k accounts of your employees then that is absolutely tax deductible and will reduce your taxable income.

Why is it not reducing your taxable income?  Maybe you are entering it incorrectly.  Maybe you are using the wrong program.  

I would recommend using the "Live Expert" help in the right upper corner to see if having someone walk you through helps.

Here is a link to finding a TurboTax expert

[rulamo]

So, I am self-employed with a solo 401 K and can both make a contribution as an employee (19,500) and as an employer (25% of profits after the employee contribution). When entering my business income in Turbotax I can enter information about self-employment retirement contributions and turbotax then calculates how much I can contribute as an employer. When I enter the employee portion of my contribution (19,500) my taxes owed goes down in the upper left corner, but when I enter the employer contribution in the calculation nothing happens to my taxes owed

[RaifH]

Both contributions should reduce the taxable income on your return. However, it is possible that other credits and deductions have already reduced your taxable income to 0 and the only taxes you are paying are your self-employment taxes. Your 401(k) contributions will not reduce your taxes if they are solely derived from self-employment. 

Follow these steps to preview your 1040 to see if that is potentially what is limiting the tax benefit from your 401(k) contributions:

1. Open or continue your return.
2. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
3. With the Tax Tools menu open, you can then view only your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
4. If the amount on Box 22 of your 1040 is 0, that means you have no taxable income and the additional contributions to your 401(k) are not reducing your taxes.