When I entered my traditional 401(K) contributions to my solo 401(K), the employer portion did not reduce my tax burden. Is there a way to correct this?

[dal16]

The amount I have entered is less than the 20% limit imposed on total earnings.

[TomK2023]

The IRS does not allow you to deduct your own retirement contributions as a business expense on Schedule C (otherwise you would be avoiding Self-Employment (SE) Tax (Social Security and Medicare) on that money.).

Solo 401(k) contributions only reduce Income Tax, not SE Tax.

Check Schedule 1, Line 16 (or Line 15). The total of your elective deferral and employer match is combined there (flowing to your 1040, Line 10, reducing your Adjusted Gross Income (AGI)).

Do not enter your retirement contributions under "Business Expenses" on Schedule C (This is only for contributions made for employees, not for yourself).

1. Open or continue your return.
2. Under Federal tab, Click on Wages & Income.
3. Scroll down to Other Business Situations, and Click Self-Employed Retirement Plans.
4. Enter your retirement contributions here (places the deduction on Schedule 1).

Note: Taking a Solo 401(k) deduction, reduces your "Qualified Business Income" (QBI).  

The QBI deduction allows you to take 20% of your profit tax-free; when you contribute to a 401(k), your QBI deduction also shrinks slightly.

For example, for every $1,000 you put into the 401(k), you lower the QBI deduction by $200 (you still save more overall, but it looks like 80% of what you expected).

You can Check your Tax Summary (or view your 1040 form), and note the value on Line 11 (AGI).

1. Delete the Solo 401(k) contribution temporarily.
2. Check Line 11 again (if the AGI went up by the exact amount of your contribution, then the program is  calculating your deduction correctly... "above the line" rather than inside your business profit.).