Hi there,
This seems to be too complex a topic to use Google searches to find an answer to (and it's possible I'll end up needing a tax professional, but here goes).
I'm doing taxes for my 23-year-old son (numbers are all approximate). He's in school but working a part-time internship and is also equal partner (50/50) in a really small software development firm.
He made $4k from the internship in 2023 (W2).
He also made $4k from the software development work (K-1).
Then some other odds and ends like small capital gains/losses and interest/dividend, count them as zero.
I assumed that through his solo Roth 401k with his firm, he could contribute a chunk of his earnings (he contributed $3500). I also assumed that he could contribute independently to max his individual Roth IRA (he contributed $6500).
On starting to file his taxes with H&R Block Taxcut, though, it is fine with the $3500 to the solo Roth 401k, but says he can only contribute a much smaller amount (give or take $3000) to his Roth. So, it's saying he has overcontributed to his Roth and needs to back that out by April 15th.
If anyone on here has had this issue or can tell me why the Roth is being restricted (perhaps his K-1 income does not count?), I'd really appreciate it. Ideally, I'd like to not have to roll back his Roth contributions for 2023.
Thanks so much,
Auro
This seems to be too complex a topic to use Google searches to find an answer to (and it's possible I'll end up needing a tax professional, but here goes).
I'm doing taxes for my 23-year-old son (numbers are all approximate). He's in school but working a part-time internship and is also equal partner (50/50) in a really small software development firm.
He made $4k from the internship in 2023 (W2).
He also made $4k from the software development work (K-1).
Then some other odds and ends like small capital gains/losses and interest/dividend, count them as zero.
I assumed that through his solo Roth 401k with his firm, he could contribute a chunk of his earnings (he contributed $3500). I also assumed that he could contribute independently to max his individual Roth IRA (he contributed $6500).
On starting to file his taxes with H&R Block Taxcut, though, it is fine with the $3500 to the solo Roth 401k, but says he can only contribute a much smaller amount (give or take $3000) to his Roth. So, it's saying he has overcontributed to his Roth and needs to back that out by April 15th.
If anyone on here has had this issue or can tell me why the Roth is being restricted (perhaps his K-1 income does not count?), I'd really appreciate it. Ideally, I'd like to not have to roll back his Roth contributions for 2023.
Thanks so much,
Auro
Statistics: Posted by Auro — Tue Apr 09, 2024 7:51 pm — Replies 3 — Views 192