I use TT Deluxe. On the screen entitled "Retirement Contribution Allocation", it asks to
"Enter the amount of your $21,311 Keogh, SEP, SIMPLE or 401(K) plan contribution deduction attributable to Consultation," where
- $21,311 is my net business income minus deductible self-employment tax (which is the maximum allowable amount that I can contribute to my individual 401(k) per my understanding), and
- "Consultation" is my business.
My self-employed health insurance deduction amount is $18,606, although I am not sure whether this piece of information would be relevant to my question below.
My question: What does the amount I enter in this question actually mean practically? Is it that I could contribute only that amount to my individual 401(k) plan? Or, does it mean I could contribute $21,311 regardless of what amount I enter into the box?
I tried different answers for my situation. The federal tax due would be the smallest when I answered with any amount between $0 and $363 in the box. Choosing any amount above $363 increased the federal tax due; and the larger the amount, the greater the tax.
Thank you in advance for your help.
