In past years, Turbotax calculated the maximum 401(k) contribution to equal the net income. In 2018, it calculated only 25% of net income. Has something changed?

[askttax9876]

This is a small side business with net income typically less than $15,000.  In 2016, and 2017 the max contribution was calculated by Turbotax to basically zero out my profits ($19k and $7K respectively).  But for 2018, the max is calculated as exactly 25% of net income.

Has the new tax law changed the deductible amount?  Or am I doing something wrong?

[dmertz · Accepted solution]

Nothing has changed except for increases in contribution limits.  Even the TurboTax self-employed retirement section remains unchanged.  You must have done something wrong.  There is no situation where TurboTax would calculate your maximum self-employed retirement deduction for any type of self-employed retirement plan to be exactly 25% of net income from self employment with net income from self employment in the range that you have.

I suggest comparing the Keogh, SEP and SIMPLE Contribution Worksheet between your 2017 and 2018 tax returns.

[askttax9876]

BRILLIANT!  Thank you.  Rather than look at my input, I did as you suggested and looked at the worksheet to see what TT was really doing.  The box for "maximize 401(k)" on the worksheet was not checked.  I checked it and the max contribution was recalculated to equal to net profit.

THANK YOU!