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rjb5
Returning Member

self-employment deductions exceed income

I have a question about how to complete Schedule 1. I am retired and have a small amount of self-employment income. I would like to make the maximum contribution to a 401k plan. My question is whether my adjustments to income (line 22 on Schedule 1) can exceed my business income (line 9 on Schedule 1).

 

For example, I have income of about $12k (line 9). My self-employed insurance deduction is about $5k (line 16). Turbotax caculates my maximum 401k as about $11k (line 16). This means that my adjustments to income are about $16k (line 22). Does IRS allow line 22 to exceed line 9 on Schedule 1? Do I need to reduce my 401k to about $7k, so my adjustments just equal my business income.

 

Thanks.

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2 Replies

self-employment deductions exceed income

schedule c income less the se tax on schedule 1 line 14 less the 401(k) contribution schedule 1 line 15  less your se health insurance schedule 1 line 16  should be greater than or equal to zero. it should not be negative. you have entered something incorrectly. did you put your se health in the proper box on schedule C?

there should be a worksheet for health and long-term care as part of schedule c. on line B of that form you must input manually the 401k contribution which can not exceed the amount that's precomputed and listed a little to the left. thus if you make the max 401k contribution the deduction for se health on schedule 1 line 16 drops to zero so net schedule C less se tax less 401k is zero. 

rjb5
Returning Member

self-employment deductions exceed income

Thanks for your suggestions. I must have gotten lost in their questions, so I'll look through them again and fix the problem.

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