Maximum deduction for 401k contribution

[Inscanik21]

Are there any criteria if I can select a box or not on the Keogh/SEP worksheet for "check here to compute the maximum dedcution contribution"?? I contributed $21,000 to my solo 401K in 2023.

By checking this box, it makes a difference of $5,300 in what I owe, in other words, it goes from me owing $2842 to a refund of $2561, by simply checking this box or not ???

Is this an option or is there some criteria of whether I can check this box or not???? 

I hope this makes sense.

[KrisD15]

When you check that box, the program computes the maximum amount to contribute for the best tax break. 

If the refund changes, I would assume the program is computing a higher amount to contribute. 

Follow the interview to see how much the program suggests you contribute and make that by April 15th if you want to take advantage of the contribution. 

If this is a SEP, you can file for extension which would give you more time to make the contribution (extensions do not work this way for IRA's)  

[dmertz]

The only circumstances where you might not be able to use the Maximize function for a self-employed 401(k) contribution is if you made employee elective deferrals or Roth contributions to a 401(k), 403(b), federal TSP of a SIMPLE plan at another employer.  In that case you need to limit your elective deferral to the self-employed 401(k) so that the combined employee elective deferrals and Roth contributions do not exceed the limit for your age.

[Inscanik21]

The only contributions I made were to my solo 401K, I do have a Roth IRA but did NOT make any contributions to that roth in 2023.

[Inscanik21]

I am a sole proprietor under an LLC and I have no other employees. 

[Inscanik21]

but it changes the amount I owe??? I don't think it would do that if it was saying oh you can contribute up to this amount??? it goes from owing roughly $2800 to a refund of $2561 dollars... a $5300 dollar change!

[dmertz]

TurboTax is calculating on the Keogh, SEP and SIMPLE Contribution Worksheet a substantially higher combined elective deferral and employer contribution than the $21,000 you have already entered and deducting that total when determining your AGI.

[Inscanik21]

$21000 is the total, I did not make any other contributions. I did not make any other "elective deferrel or employer contribution" - the bottom line question is, can I select that boxes that reduces my overall tax liabilty by $5300 dollars? This is the question I'm trying to get an answer too.

[dmertz · Accepted solution]

You are not permitted to claim a self-employed retirement deduction for more than the amount that you contributed.  If you mark the Maximize box for a self-employed 401(k), you must actually make the maximum distribution calculated, otherwise you will be filing an incorrect tax return.