401K solo tax reduction numbers are too low

[misha_1966]

Hi,

I have a small individual LLC business, and opened individual 401K account.

By entering different numbers in TurboTax self-employed 401K form I can see the different federal taxes calculated. 
By lowering Elective Deferrals by $1000, I get tax increase of $182.

By lowering my business income in another TT form by $1000, I get tax decreased by $314.

I would expect the numbers to be close, if not the same.

Am I doing something wrong?

thank you!

[MinhT1 · Accepted solution]

The difference is explained by self-employment tax.

Lowering your business income will lower your tax and self-employment tax.

Lowering your solo 401(k) will only increase your tax, and not self-employment tax.

[misha_1966]

Thank you!

I am doing  401K solo for the first time.
So, you say, that 401K solo cannot help deduct self-employment tax ?

I am confused - TurboTax shows the above numbers in "Federal Tax" window.
Michael

[MinhT1]

Your solo 401(k) deduction will help reduce your taxable income and your tax liability, but not self-employment tax.

[misha_1966]

Got it. TT just reports both SE and income tax combined. 

Your quick response is appreciated!!