topic How deduct individual/solo 401(k) from personal taxes when not via W-2? in Retirement tax questions

How deduct individual/solo 401(k) from personal taxes when not via W-2?

jross1801 — Thu, 19 Sep 2019 04:14:28 GMT

This year I started an individual/solo/self-employed 401(k) as have my own s-corp and am the only employee. ~$19k from me as employee and ~$12k from me as employer.

However, I did not start it Jan 1 where I might withhold via W-4 setup each pay period, but instead just wrote checks (i.e. my W-2 at the end of the year will not reflect my personal contributions).

So, how will I deduct this in TurboTax personal? For the business contributions I'm fine.. will just be an expense. But for the personal, will there be a place in Turbotax personal where I claim it since it wasn't withheld and won't be reflected on my W-2?

Thank you!

Re: How deduct individual/solo 401(k) from personal taxes when not via W-2?

Anonymous — Thu, 19 Sep 2019 06:41:30 GMT

not exactly sure what you are saying about your w-2. however, if you plan to convert the money you took into wages and put it on a w-2 you have serious problems. that compensation is subject to social security and medicare taxes along with possible federal and state withholding for which you apparently have not filed payroll tax returns. in addition there are federal and state unemployment taxes.

that $19,000 goes on the w-2 and is a reduction of your taxable wages.

you can't deduct it personally on your 1040

seek professional guidance as soon as possible.

Re: How deduct individual/solo 401(k) from personal taxes when not via W-2?

dmertz — Thu, 19 Sep 2019 12:20:34 GMT

"my W-2 at the end of the year will not reflect my personal contributions"

That's improper. The deposits must be made by the S corp, elective deferrals must be reported with code D in box 12 of your W-2 and the amount reported in box 1 of your W-2 must be reduced by the amount of your elective deferrals. With respect to retirement contributions you are not self-employed, you are an employee of the S corp. There is no legal way to deduct these contributions on your individual tax return.

I'm not sure how you fix this substantial error made by your S corp and it's not clear whether or not you've disqualified your 401(k), so seek professional guidance.

Re: How deduct individual/solo 401(k) from personal taxes when not via W-2?

jross1801 — Thu, 19 Sep 2019 17:54:37 GMT

So, for the next 4 months (pay periods), should I make my salary much higher than it was and then deduct significantly over these next 4 months? I'm guessing that's my only option if it has to come out of payroll? thanks again.

Re: How deduct individual/solo 401(k) from personal taxes when not via W-2?

dmertz — Thu, 19 Sep 2019 18:10:35 GMT

Perhaps, but I'm not sure how you fix the problem of the deposits you already made and perhaps correct the plan agreement to show the plan as established under the S corp. If the plan was properly established under the S corp, you might only have an accounting problem within the S corp to sort out so that the W-2 reports the proper amounts in boxes 1 and with code D in box 12.

A W-4 has nothing to do with establishing payroll deductions for the purpose of elective deferrals to a 401(k). You must make a written request to your S corp to make any elective deferrals to a 401(k), either as a lump sum or as periodic deferrals, and no elective deferrals are permitted until you make the election. The S corp will need to retain a copy of that election dated prior to any deposits of elective deferrals.