swongtax
Level 4

Thank you but I am still confused, and I just realized that I mistakenly reported the Employer matching contribution amount on Schedule C Pension/Profit sharing line instead of Schedule 1, Line 15 (See below description in BOLD). 

However, on the Proseries Basic software, I am trying to redo this correctly on Schedule 1 Line 15, but when I click the box that says Calculate Maximum Allowed Contribution, the step by step calculations will add both the Employee and Employer Contributions and then somehow end up with a "Maximum Deductible contribution" amount, which is a bigger number than the two numbers combined.  This number then becomes an adjustment that goes back on Form 1040 (to decrease taxable income).  Why would the "Maximum deductible Contribution amount" be greater than the sum of the Elective Deferral contribution amount plus the Employer contribution amount?  This does not make much sense to me.

 

SW

 

Important Distinction for Claiming Contributions

Important note: you do not report the employee portion of the Solo 401k contribution on Schedule C. The purpose of Schedule C is calculating your business expenses before determining your earned income from the business.

For pass-through businesses, the employee and employer portion of the Solo 401k contribution is reported on line 15 of Schedule 1. There is a direct connection from Schedule C to Schedule 1. For example, you report business (earned income) from Schedule C on line 3 of Schedule 1. Then, as part of the Schedule 1 calculation, the employer contribution to your Solo 401k becomes part of your adjusted income. Afterward, that is subtracted out of your taxable income. Finally, report adjusted income on line 8a of Schedule 1 on your 1040 form (see line 8b subtraction calculation).