401k

Forum|Forum|3 years ago
December 22, 2022
2 replies
6 views

I get two 1099 one from a state with income tax and the other not work in two different states one solo 401k

How does software distinguish where the money is coming from

Best answer by NCperson

Hello

I was try to be clearer this time.

I live in a state with no income tax where I get a 1099 NEC. Let's say I make 40K.

I work in another state for 6 months where I do not live permanently and let's say I make 80K on a 1099 NEC and that state has income tax.

The gross total is 120K and I want to put whatever percentage of that amount is allowed in my solo 401k. Let us say calculated (employee and employer amount) is 40K.

I would rather use the money from the state that had the 1099 NEC with state income tax. How do I alert the software that is where the money is coming from? I am not sure how to be any clearer than this?

@gerardo47 - it doesn't work like that. for federal purposes, everything is added together, regardless of what state you earned the money in.

for state purposes, it'll probably work out as you want, but what state is it? Many states begin their calculations with the federal AGI (Line 11) which in your case will already have the 401k contribution removed.

NCperson

Level 15

@gerardo47 - a little hard to read what you wrote. the software bases your state income tax on where you live or work - not where the payment comes from.

what state do you work in?

what state do you live in?

what state does the 1099R withhold income tax for?

rjs

Level 15

What kind of 1099s do you get? There are 21 different kinds. There is no plain Form 1099. All 1099 forms have one or more letters after the 1099. The most common are 1099-INT, 1099-DIV, 1099-B, 1099-NEC, 1099-R, and 1099-G.

If you have a 1099-G or 1099-MISC, which box is the income in?

If you have a 1099-NEC or 1099-MISC, is it from an employer who also gave you a W-2?

NCperson and xmasbaby0 think you are talking about 1099-Rs for money that you took out of your 401(k) plans. Is that what it is? Or did you get 1099-NEC or 1099-MISC forms from clients that you did work for as an independent contractor?

@gerardo47 wrote:

How does software distinguish where the money is coming from

Where what money is coming from? Money that you took out of the 401(k), money that clients paid you for your services, or money you earned as an employee (on a W-2)?

gerardo47Author

Level 2

Okay so the 1099 is from a contracting company so it would be a 1099 NEC and it would be boxed to other income I'm not taking any distributions I'm talking about putting the money into the 401K so basically we're talking about two separate streams and incomes that are in form of 1099 as other income and basically one of them has a tax consideration because I worked in the state where there was income taxes in the other I did not how does the software adjust for that

NCperson

Level 15

The state in question is Colorado

@gerardo47 - it will work out as you intend. CO begins its calculations with Federal Taxable Income (line 15) which already will exclude the contribution to the 401k.