I am going to open a Solo401K this year to put in some side income that will be paid on a 1099 and am trying to figure out exactly how to calculate the maximum employer contribution. I will be making $8800 from the 1099 income and will make more than the $118,500 maximum for SS taxes on W2 income alone. From what I gather from schedule SE, I will only need to pay a self-employment tax of 2.9% as my SS tax will be deducted from the W2 wages. That leaves my SE tax as $235.68 (2.9% of 8,126.80, which is 92.35% of 8800 - calculations on form SE).
When calculating my contribution, which is 25% of net income, would I simply go:
8800 (income) - 117.84 (1/2 SE) = 8682.16 (net income) * 0.25 = $2170.54 (my contribution)
Thank you for any assistance that can be provided.
When calculating my contribution, which is 25% of net income, would I simply go:
8800 (income) - 117.84 (1/2 SE) = 8682.16 (net income) * 0.25 = $2170.54 (my contribution)
Thank you for any assistance that can be provided.
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