0

My net profit from a freelancer job is $2656. The IRS "self-employment estimated worksheet" calculated that my SE tax is $375.27, and "Deduction worksheet" calculated that after SE tax deduction, my maximum solo 401k contribution is $2648.37 After I pay SE TAX, the net profit reduces to $2280.73. Can I really contribute more than the profit after SE tax?

  • Is this a pre-tax 401(k) or a post-tax 401(k)? – shoover Dec 6 '19 at 20:44
  • This is a pre tax Solo 401k. – soodala2k Dec 8 '19 at 16:07
1

If you contribute the complete amount to your 401k, you don't own taxes on it. As a result, you can claim back the taxes you already paid, in your annual tax-filing, and yes, you can put the complete amount, including the temporarily 'missing' taxes, in the 401k (assuming you have enough cash on hand).

  • Really. I asked a question in a previous post and the bloggers said that SE, self employed tax must be paid first, then I can contribute whatever money left up to maximum allowable amount based on IRS. Your answer was my original ideal plan that I gave up after getting old response from my previous question. You suggested I can contribute all after expenses to my SOLO 401k, right? Thanks. – soodala2k Dec 8 '19 at 16:14
  • @soodala2k you've got "two" wage numbers: one that your income tax is calculated on (which is reduced by 401k contribs), and another that FICA/Medicare are calculated on (and which are not affected by 401k contribs). – RonJohn Jan 6 at 2:09

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.