swongtax
Level 4

I figured it out!

ON THE PROSERIES KEOGH, SEP, AND SIMPLE CONTRIBUTIONS WORKSHEET(linked to Schedule 1, Line 15), UNDER "INDIVIDUAL 401K", enter the amount of Elective Deferral to the Individual/Solo 401k, then enter the Employer contribution amount. Once those two numbers are entered, the total should be the sum.  But in case one is concerned whether the Employer Contribution is over the limit allowed or under the maximum allowed, click the box to --->Calculate the Maximum Deductible Contribution (EMPLOYER PORTION).  Once clicked, the program automatically calculates the MAXIMUM deductible Contribution (sum of Employee and Employer) and puts the maximum amount on Schedule 1 Line 15 and Form 1040.  This is for planning purposes.

 

To check this, I increased the Employer Contribution amount and see what would happen if the sum of the two numbers exceeded the MAXIMUM deductible Contribution amount calculated by Proseries, and the amount will stay the same (euqal to the maximum number) even if the Employer contribution plus the Employee deferral contribution added together is too high since the limit is reached.

 

So, the box (to calculate the maximum deductible amount) is for planning/informational purposes only.  It should not be checked on the finalized return.  

Also, for those who might be struggling to understand (like me) why the Employer contribution should not be deducted on Schedule C, Line 19, Penson/Profit sharing/Qualified plan line.  I did some more research and this is because Employer contribution refers to contributions contributed to the "employees" only, which does not include the Self-employed taxpayer (Pass-through Sole propriertorship or single member LLC treated as a regarded entity, etc).  This is the initial mistake that I made!  Sigh....

Thank you to TaxGuyBill for trying to help clarify this!

I spent so much time trying to read and understand the IRS Publication 560 description on this topic.  The IRS language is extremely confusing!  Wish it was more clearly written.

SW

 

 

0 Cheers