topic In past years, Turbotax calculated the maximum 401(k) contribution to equal the net income. In 2018, it calculated only 25% of net income. Has something changed? in Retirement tax questions

In past years, Turbotax calculated the maximum 401(k) contribution to equal the net income. In 2018, it calculated only 25% of net income. Has something changed?

askttax9876 — Mon, 03 Jun 2019 19:10:39 GMT

This is a small side business with net income typically less than $15,000. In 2016, and 2017 the max contribution was calculated by Turbotax to basically zero out my profits ($19k and $7K respectively). But for 2018, the max is calculated as exactly 25% of net income.

Has the new tax law changed the deductible amount? Or am I doing something wrong?

Nothing has changed except for increases in contribution...

dmertz — Mon, 03 Jun 2019 19:10:40 GMT

Nothing has changed except for increases in contribution limits. Even the TurboTax self-employed retirement section remains unchanged. You must have done something wrong. There is no situation where TurboTax would calculate your maximum self-employed retirement deduction for any type of self-employed retirement plan to be exactly 25% of net income from self employment with net income from self employment in the range that you have.

I suggest comparing the Keogh, SEP and SIMPLE Contribution Worksheet between your 2017 and 2018 tax returns.

BRILLIANT! Thank you. Rather than look at my input, I d...

askttax9876 — Mon, 03 Jun 2019 19:10:41 GMT

BRILLIANT! Thank you. Rather than look at my input, I did as you suggested and looked at the worksheet to see what TT was really doing. The box for "maximize 401(k)" on the worksheet was not checked. I checked it and the max contribution was recalculated to equal to net profit.

THANK YOU!