TurboTax not letting me deduct full solo 401k contributions

[braider68]

Hi Dubstar 23- I am having the same problem as yourself. Just posted this. I am only allowed to deduct $30,500 even though my wife put $76,500 into her Solo 401K. It is not allowing me to make the employer contribution just the employee contribution. Maybe there is a question down the line in the process where they ask for the "employer" portion? That is my question  Here is my post.

According to my understanding of the IRS code for Solo 401(k), I should be able to deduct $30,500 ($23,000+ $7,500 my wife is over 50) as the "employee" of the Solo 401K. Secondly, I should be able to deduct another 25% of "compensation" as the "employer." According to the IRS, the maximum deduction is $69,000 + $7,500=$76,500 for 2024. My wife contributed this amount, is self employed, over 50 and her income level is high enough to justify this additional 25% deduction. Turbo Tax is limiting my deduction to $30,500.  I have stopped at this point in the return. Does Turbo Tax at a later part in the process ask me for the "employer" deduction?? Will this total amount be on Schedule 1, Part II, line 16? Surely, TT will let us deduct more than $30,500 if there is sufficient income to allow for the further 25% deduction? Just wondering if this is later in the process or there is a glitch in the software, if so, I will take my business elsewhere as this is a large tax difference. Thanks for the help out there in advance. 

[RobertB4444]

The employer portion should be entered on the business return in the employee benefits section.

@braider68 

[dmertz]

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@RobertB4444 wrote:

The employer portion should be entered on the business return in the employee benefits section.

@braider68 

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That assumes that the business is an S corp or a C corp.  Nowhere in the posts above is it mentioned that the business is an S corp.  If it's not an S corp or a C corp, the deduction for the employer contribution is to be included as part of the self-employed retirement deduction on Schedule 1.

As I mentioned above, examine the Keogh, SEP and Simple Contribution Worksheet to see the calculation of the self-employed retirement deduction.

[braider68]

Thank you dmerz. 

No this is a Sole proprietor with a Solo 401K. So are we saying the the "employee" deduction should be on Schedule 1, Part II, Line 16 and the "employer" portion should be on line 19, of Schedule C Profit and Loss From Business.  We need to capture both the employee and employer deductions. I appreciate the help. 

[dmertz]

"So are we saying the the "employee" deduction should be on Schedule 1, Part II, Line 16 and the "employer" portion should be on line 19, of Schedule C Profit and Loss From Business."

No.  The deduction for both employee and employer contributions ends up combined on Schedule 1 line 16.  The business-expense deduction for retirement contributions that goes on Schedule C is for employer contributions made to the accounts of non-owner employees (which you don't have because you are not permitted to have a solo 401(k) when you have eligible employees).