I am only able to enter solo 401k contributions for my spouse, who does not have a solo 401k

solo401k
solo401k Member Posts: 1 Newcomer
in Credits/Deductions

I am married, filing jointly. I have a job in which I receive a W2, but I am technically self-employed as an independent contractor. I am a personal services contractor with the US federal government, for context. I have a solo 401k for which I have contributed the maximum amount. However, when I try to enter my solo 401k contributions, I am only able to enter under my wife's name in the FreeTaxUSA software, which, if I do enter it under her name, results an incorrect total amount down the line as it gets connected to her business income.

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Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 252

    Hi solo401(k),

    Thanks for joining our Community and writing in.

    Here's an informative thread on this topic from last year in our Community.

    FreeTaxUSA allows you and/or your spouse to enter Solo 401(k) contributions (aka One-participant 401(k) plans) as elective employee contributions. If only one spouse has a business on Schedule C, only that spouse will have the option. If both spouses have a Schedule C, both spouses will have the option.

    You'll find that under the Deductions/Credits section > Common Deductions/Credits > SEP Contributions > "Do you have a self-employed retirement plan?" screen.

    For Solo 401(k) contributions, check NO to the question, "Did you make employer contributions to an SEP retirement plan?" and check YES to the question, "Did you make elective employee contributions to a qualified retirement plan?"

    The drop down menu will open for you and/or your spouse to enter the contribution amount.

    The IRS allows elective employee deferrals up to 100% of earned income* (for self-employed) up to the allowable amount, $23,000 in 2024 up to age 50, or if over age 50 an additional $6500 catch up contribution, plus employer nonelective contributions.

    This IRS website has details on how to calculate how much you can contribute and deduct.

    * When figuring the contribution, compensation is your “earned income,” which is defined as net earnings from self-employment after deducting both:

    • one-half of your self-employment tax, and
    • contributions for yourself.

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