This entire discussion has been incredibly helpful! As someone who just started freelance consulting and has been paralyzed by all the conflicting information about solo 401(k) reporting, this thread finally gave me the confidence to move forward. The consensus seems clear for sole proprietors: both employee and employer contributions go on Schedule 1, Line 16. What really sealed it for me was hearing from the actual tax preparer who confirmed this approach, plus seeing how many people have successfully used this method. I'm planning to set up my solo 401(k) with Fidelity before year-end (thanks for that provider recommendation!), and I feel much more prepared now for the tax reporting side. The calculation examples and the clarification about the effective 20% rate for employer contributions were especially valuable. One thing I love about this community is how people share both their successes and their mistakes. Hearing about the person who was reporting incorrectly for two years but got it sorted out shows that even if you mess up initially, it's fixable. Takes some of the pressure off getting everything perfect on the first try. Thanks to everyone who contributed their knowledge and experiences - this is exactly why community forums like this are so valuable for us solo business owners navigating these complex tax situations!

As someone who went through this exact confusion last year, I want to echo what everyone has shared - the Schedule 1, Line 16 approach for sole proprietors is definitely the way to go. I spent way too much time overthinking it! One thing that might help future readers: I found it useful to think of it this way - as a sole proprietor, you're essentially both the employee AND the employer of your business. Since there's no separate business entity to deduct the employer contribution from (like there would be with an S-Corp), both portions flow through to your personal return as an adjustment to income. Wesley, your calculation looks spot-on. That $34,506 total going to Schedule 1, Line 16 is exactly right for your situation. For those just starting out with solo 401(k)s, one tip that saved me stress: set up automatic transfers from your business account to make regular contributions throughout the year rather than trying to do one big contribution at year-end. Makes the cash flow easier and ensures you don't forget to fund it before the deadline. The learning curve feels steep at first, but once you get through that first year of reporting, it becomes much more routine!

As a newcomer to this community and someone who's dealt with bonus tax confusion myself, I wanted to add another perspective that might help. I found it really useful to think about the "timing" aspect of bonus withholding versus actual taxes owed. When you get your bonus, the payroll system doesn't know what your total annual income will be - it just knows it needs to withhold something right now. So it uses that flat 22% federal rate as a "safe" estimate. But when you file your taxes in April, that's when the IRS looks at your ACTUAL total income and calculates what you really owe based on the tax brackets. What helped me feel better about the whole situation was realizing that if I usually get a refund when I file taxes, having extra withheld from my bonus just means a bigger refund. And if I usually owe money, that extra withholding helps cover what I'd owe anyway. Either way, I'm not actually losing money - it's just a matter of when I get access to it. The key insight for me was that the withholding system is designed to be conservative (err on the side of withholding too much rather than too little) because most people prefer getting money back rather than owing a big tax bill in April.

As a newcomer to this community, I've been following this discussion with great interest since I'm expecting my first bonus next month and was already starting to worry about the tax implications. This thread has been incredibly educational! What really resonates with me from reading everyone's experiences is how common this confusion is - it seems like almost everyone goes through that initial "sticker shock" when they see how much gets withheld from their bonus. I appreciate how @Reginald Blackwell explained that it's just withholding, not the actual tax rate, and @QuantumQuest's perspective about the timing aspect really helps me understand why the system works this way. I'm planning to use the IRS withholding estimator that several people mentioned to get a better sense of my overall tax situation before my bonus arrives. That way I can set proper expectations and maybe even adjust my regular withholding if needed. It's reassuring to know that this community is here to help newcomers like me navigate these confusing tax situations! Thanks to everyone who shared their experiences and practical advice - this is exactly the kind of supportive discussion that makes me glad I found this community.

One thing nobody mentioned yet - when you're liquidating an S-Corp, check if your state requires a tax clearance certificate before you can formally dissolve the business. I completely missed this step and had to reopen my case with the state after I thought everything was finished. The balance sheet issues in TurboTax might be frustrating, but don't forget about the state-level requirements too. In my state, I couldn't formally dissolve until I got clearance showing all state taxes were paid, and that process took almost 3 months!

Great point about state requirements! I'm actually going through S-Corp liquidation right now and almost made the same mistake. For the balance sheet issue in TurboTax, one thing that helped me was creating a simple spreadsheet to track all my liquidation transactions before entering them into the software. I listed: - Beginning balances for all accounts - Each distribution with the corresponding reduction in both cash and equity - Asset disposals with any gain/loss calculations - Final balances (should all be zero) This helped me see exactly where the imbalance was before fighting with TurboTax. In my case, I had forgotten to record the accumulated depreciation removal when I disposed of some equipment. Also, make sure you're using the correct tax year dates. Since you're liquidating, some transactions might span multiple tax years, and TurboTax needs to know which year each transaction belongs to for proper reporting. The taxr.ai tool mentioned above sounds interesting - might be worth trying if you're still stuck after manually checking your entries.

Great question! Your 2022 values are actually still pretty solid for 2025 filing. I've been doing my own donations for years and those numbers align well with current thrift store prices. One thing I'd add that hasn't been mentioned - if you're using software like TurboTax or FreeTaxUSA, they often have built-in donation value guides that get updated annually. These can be helpful for cross-referencing your values. Also, don't forget about accessories! Belts ($3-5), purses ($8-15), and ties ($4-8) can add up if you donated any. And if you donated any designer items or higher-end pieces, you might be able to justify higher values as long as they were in good condition. The key is being reasonable and consistent. Your list shows you're being thoughtful about this rather than just making up numbers, which is exactly what the IRS wants to see.

One thing to keep in mind is that the IRS has gotten stricter about non-cash charitable deductions in recent years, especially after seeing inflated valuations. Your values from 2022 are actually quite reasonable and conservative, which is good. I'd suggest sticking with those values or even being slightly more conservative. The difference between claiming $10 vs $12 for jeans isn't worth the potential audit risk. What matters most is that you can demonstrate you used a consistent, reasonable method for valuation. Also, make sure you're only claiming items that were actually in "good used condition or better." The IRS specifically states that items with significant wear, stains, or damage don't qualify for deductions at all. When in doubt, it's better to exclude questionable items rather than risk having your entire donation questioned during an audit. Document everything well - keep that Goodwill receipt, maintain your itemized list, and if possible, take photos before donating. The goal is to show you made a good faith effort to determine fair market value using reasonable methods.

One thing that caught me off guard when I had a big gambling win last year was the backup withholding situation. If you don't provide your SSN to the casino or if there are issues with your tax ID, they'll withhold 24% for backup withholding on top of the regular withholding. This happened to me when I forgot my ID at a casino and they couldn't verify my SSN immediately. Also, for anyone dealing with multiple gambling venues, make sure you're keeping track of all your W-2G forms. I had winnings from three different casinos and two online poker sites, and it was a nightmare trying to reconcile everything at tax time. Each venue reports to the IRS separately, so you need to make sure you're accounting for all of them on your return. The IRS matches these forms to your tax return, so missing even one can trigger an audit or at least some unpleasant correspondence. I learned this the hard way when I missed a $1,800 win from a smaller casino and got a notice months later.

Just wanted to add something that might help with the confusion about withholding vs. final tax liability. I work in casino operations and see this misunderstanding all the time. The key thing to remember is that gambling winnings are treated exactly like a bonus from your employer. When you get a work bonus, your employer withholds taxes at a flat rate (usually 22% for bonuses), but your actual tax rate depends on your total income for the year. Same principle applies to gambling. So if you win $800,000 like in your example, the casino withholds 24% ($192,000), but when you file your taxes, that $800,000 gets added to whatever other income you had. If your total income puts you in the 37% bracket, you'll owe 37% on the portion that falls in that bracket - meaning you could owe significantly more than what was withheld. This is why it's crucial to set aside additional money beyond what's withheld, especially for large wins. I've seen too many people spend their winnings thinking the 24% withholding covered their full tax obligation, only to get hit with a massive bill later.