I have a regular W2 job that I contribute to the max elective amount to pretax 401K in 2023. I have a side job being a realtor that I made a net profit around 19K. I plan to make profit contribution as an employer. When I tried to max profit sharing, Turbotax automatically calculate the amount which is the full amount of the net profit of 19K, isn't that only Max of 25% of net profit can be contribute as an employer?
TurboTax's Maximize function for an individual 401(k) contribution cannot be used when you make elective deferrals to another employer's 401(k) plan.
Because you maxed out the elective deferrals to anther employer's plan, use the Maximize function for a SEP plan instead to calculate your maximum employer contribution to the individual 401(k). Absent an elective deferral, the calculation of the employer contribution is the same for both types of plans, 20% (the adjusted value required for the self-employed when the base rate is 25%) of net earnings. Earnings are net profit on Schedule C minus the deductible portion of self-employment taxes.
TurboTax's Maximize function for an individual 401(k) contribution cannot be used when you make elective deferrals to another employer's 401(k) plan.
Because you maxed out the elective deferrals to anther employer's plan, use the Maximize function for a SEP plan instead to calculate your maximum employer contribution to the individual 401(k). Absent an elective deferral, the calculation of the employer contribution is the same for both types of plans, 20% (the adjusted value required for the self-employed when the base rate is 25%) of net earnings. Earnings are net profit on Schedule C minus the deductible portion of self-employment taxes.
@dmertz Thank you very much for your explanation
Now I understand I could check the box to maximize profit sharing keogh but can't check the box to maximize contribution of individual 401K