Define "Net Income" as a biz; how do you calc max *employer* 401k contribution?

[neo von retorch]

I probably should've done my taxes by hand back when they were easy.

Last year, I had a rental, W2 income with 401k contributions, and I formed an LLC, got "1099" income (though not really, as it was business-to-business, so I have no documentation except my own), created a solo 401k, and bungled the contributions through Vanguard several times. (I accidentally made 2016 contributions at first. Finally in January of 2018, I got them converted to 2017. But then in February, I accidentally made another 2017 contribution.)

Really, I can pretty much bungle through all the rental and Schedule C questions, where I try to (accurately) come up with all the deductions I believe I qualify for. But, my real question is...

How do you calculate the maximum "employer non-elective contribution" (aka "profit share") to a single-member 401k?

My best understanding is that I take "net income" (which, I think, is just "income" that my business was paid), deduct 6.2% (half of self-employment tax), and then further deduct any "employee" contribution made to the 401(k) through the business. The result is called "earned income", and that is multiplied by 25%. The result of that is the maximum employer contribution.

(So my sub-question is What is "net income"?)

[wudged]

See the spreadsheet at https://thefinancebuff.com/solo-401k-for-part-time-self-employment.html

[tralfamadorian]

If you have your business taxed as a LLC (schedule C), 20%.

If you have your business taxed as a S Corp (K-1/W2), 25% of W2.

[neo von retorch]

If you have your business taxed as a LLC (schedule C), 20%.

So it's exactly 20% of my total business income? Is that correct?

[tralfamadorian]

If you have your business taxed as a LLC (schedule C), 20%.

So it's exactly 20% of my total business income? Is that correct?

Yes, 20% of your schedule C number.

[terran]

If you have your business taxed as a LLC (schedule C), 20%.

So it's exactly 20% of my total business income? Is that correct?

Yes, 20% of your schedule C number.

That's not quite right. It's actually 20% of your schedule C income (subject to certain limits) less 1/2 of self employment taxes.

You should be completing the worksheet in publication 560. I made a spreadsheet based on that worksheet that does the math for me.

[neo von retorch]

There seems to be additional limits that I had not seen discussed.

https://obliviousinvestor.com/solo-401k-contribution-calculator/

Most importantly:

The employer contribution is limited to half of the difference between your net earnings from self-employment and the employee contribution.

.

I had not factored the above in, so I may have already over-contributed.