Where do I deduct my annual solo 401k contribution?

You first must identify the type of self-employed entity (e.g., sole proprietorship, corporation, or partnership) sponsoring the solo 401k plan to determine which tax return to claim the annual solo 401k contribution. 

Partnership or Sole-Proprietorship

If the self-employed business is a partnership or sole-proprietorship, the solo 401k contribution is deducted on line 28 of Form 1040. 

Subchapter S-Corporation

If the self-employed business is a subchapter S-corporation, the solo 401k contribution is deducted on IRS  Form 1120S.

Subchapter C-Corporation

If the self-employed business is a subchapter C-corporation, the solo 401k contribution is deducted on IRS Form 1120.

Limited Liability Company (LLC)

If the self-employed business is a Limited Liability Company (LLC), the solo 401k contribution is deducted either on IRS Form 1040 or 1120 depending on the election. 

Compliance Note Regarding Making Contributions if Entity Types is an S-Corp.

Commonly, those who have an S-Corporation use the wrong income to determine their annual solo 401k contribution. You can only use W-2 income not pass-through income for solo 401k contribution purposes. This rules is covered in Revenue Rulings 71-26 and 59-221.

CLICK HERE To learn more about the solo 401k rules.