I qualify for the maximum 57,000 deduction plus the $6,500 catch up totaling $63,500. Turbo Tax is only acknowledging $25,500 when it reduces my tax burden. Shouldn't the entire $63,500 be considered pre tax?
Through your business, you can make contributions as an employee via salary deferrals, and also contribute as an employer through contributions made by your business. For deductible contributions, the employer contributions may not exceed 25% of an employee's compensation (or 20% of your net profits from self-employment for contributions to your account as an owner-employee). Employee and employer contributions in total can't exceed $57,000 for 2020 ($63,500 if you're age 50 or older and your plan allows catch-up contributions).
Thank you!! Yes I understand this , I think...However when I enter into Turbo Tax, it will not recognize half! I am fully qualified to receive the full deduction. Do I understand correctly that the entire $63,500 is PRETAX?
Ok Great. So then, how does one enter this into Turbo Tax Self Employed??????? When I enter it into the allotted screen, only half is recognized and deducted...leaving me with about a $30k tax liability for what is supposed to be a pretax deduction AND throwing me into a penalty for underpaying on estimated quarterly payments. AND IT HAS BEEN FIVE DAYS WITH NO CALLBACK FROM TURBOTAX AND NO I HAVEN'T MISSED A CALL FROM THEM!!!
Your 401(k) plan contributions for the year are made up of contributions you had deducted from your paycheck and the employer contributions to your account,
It appears you contributed $25,500 from your paychecks and this reported on your Form W2. Your company contributed another $38,000 which is deductible as a business expense reducing the net income passing through to your individual return as taxable income on the K1.
You are receiving the pretax benefit of the $38,000 company contribution plus the $25,500 personal contributions and still have a $30,000 tax liability on your personal return.