Self-Employed 401k plan contributions - employee and employer

bogleproof
bogleproof Member Posts: 2 Newcomer
edited January 2024 in Retirement Income

I started a Self-Employed 401k plan in 2023. Where should the employee and employer contributions be entered? Are they entered as a total amount in one field or separately? Does FreeTaxUSA check for excess contributions (employee and/or employer) for the Self Employed 401k plan? thanks

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Answers

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 1,007 image

    I think you are referring to an SOLO 401(k), right? If so, all your contributions to your plan can be entered on the SEP Contributions page under "Enter your 2023 deductible contributions to your Keogh, SIMPLE, or other plan:".

    If you contributed to your employees' plan, then that goes on the Schedule C, Common Expenses, "Pension / Profit-Sharing Plans" expense.

  • [Deleted User]
    [Deleted User] Posts: 0 Level 2

    Hello bogleproof,

    Your employer contributions will be entered by clicking Deductions / Credits » SEP contributions. This will be checked for excess contributions.

    As for the contributions for your employees, you will enter those as expenses on your schedule C. Specifically, in our site, you will enter it in the Common Expenses portion of the Schedule C. For this portion, you would not be penalized on your personal return if you had employees with excess contributions to their 401k, so our site does not check for that.

  • JRG
    JRG Member Posts: 1 Newcomer

    I have a sole proprietorship with my spouse as my only employee. Where do I enter these contributions to the 401(k)?

  • Austyn
    Austyn FreeTaxUSA Agent Posts: 47 image
    edited April 16

    Hi JRG,

    Since your spouse is your employee in your sole proprietorship, here's how to enter the 401(k) contributions:

    1. Your own contributions (both employee and employer portions) go under Deductions/Credits > SEP Contributions. Enter the two portions.

    2. Contributions you make as the employer for your spouse go on your Schedule C as a business expense. Go to Income > Business Income (Schedule C) > Edit > Common Expenses and enter the amount under "Pension / Profit-Sharing Plans."

    One thing to keep in mind: this applies if your spouse is a true W-2 employee (meaning you direct their work and pay them wages). If your spouse is more of a co-owner, the treatment is different. You can read more here: https://community.freetaxusa.com/kb/articles/160-is-my-spouse-considered-an-employee-or-a-co-owner-and-what-are-the-tax-implications

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