So I'm using TT H&B 2021 version to simulate our 2022 tax situation.
Both me and wife have some 1099 income (Sole Prop) and she also has some W-2 income, where she has maxed out her $20,500 - company 401K employee deferrals. I've read rules that NJ allows pre-tax deduction of 401K contributions (but not other retirement plans). My query is:
1. How do I get balance say 20-25 for her (that turbo tax shows as max allowed) to be pre-tax decutible for NJ and IRS as employer matching?
2. My own 1099 income is from me supporting in her 1099 project - so she is issuing a 1099 to me. My assumption was that as soon as I put my income as an expense (contract labor) for her, reducing her net profit (Schd. C) - and creating income for me in my own Schd. C - the total tax due shd. remain the same (both Fed and NJ levels) - but surprisingly it shoots up? Could someone explain why wud it do that?
3. And I guess both IRS and NJ state shd. allow pre-tax deductions of 20.5K (employee deferrals) and then additional around 25K more (for employer matching) for each of us separately, as long as earned income exists for both - isn't that correct?
4. And why is NJ tax due not decreasing even though I put additional amounts towards pre-tax employer matching? Where shd. I put these amounts for them to reflect and where in the forms can I check that everything is flowing properly.
Greatly appreciate any help!
