Best tax software for 1099 contractors with self-employed 401k contributions?

So I just went from being fully W2 to taking on contract work as a 1099 last year, and my taxes got way more complicated. My spouse still has a regular W2 job and we've been filing jointly through TurboTax since 2019, but this year was a nightmare. The biggest headache was dealing with my self-employed 401k. I set one up and made contributions as both "employee" and "employer" (since I'm technically both), but TurboTax kept rejecting anything above the $23k employee limit. It wouldn't recognize my employer contributions at all! I ended up having to date some contributions for 2025 instead just to get the system to accept them, even though I made them in January 2025 and could have applied them to either 2024 or 2025. Then there was the mileage tracking disaster. Every time I tried to enter my business mileage, the software kept bouncing me to some completely unrelated section. When I called support, they just told me I needed to "talk to a tax professional" even though it was clearly a software glitch. I didn't have tons of miles to claim, so I just gave up on that deduction for simplicity's sake. I'm already dreading next year's taxes and wondering if there's better software out there for our situation. We've heard about FreeTaxUSA but not sure if it handles 1099 contractor situations with self-employed retirement accounts any better. Any recommendations for tax software that actually works for self-employed folks with SE 401ks?

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18 comments

Hiroshi Nakamura

•8M

The self-employed 401k contribution limits can definitely be confusing in tax software! For 2025 filing (2024 tax year), you can make employee contributions up to $23,000 plus employer contributions of up to 25% of your net self-employment income, with a combined maximum of $69,000. Your issue with the tax software is unfortunately common. Many mainstream tax programs struggle with properly handling the employer portion of self-employed 401k contributions. FreeTaxUSA generally does handle self-employed retirement accounts better than TurboTax or H&R Block in my experience. It has specific sections for both the employee and employer portions of SE 401k contributions. For your mileage deduction issue, FreeTaxUSA also has a more straightforward business expense section that separates different types of deductions clearly. Most clients I've worked with find it more intuitive for self-employment expenses.

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Hiroshi Nakamura

•8M

FreeTaxUSA does handle rental property income quite well with dedicated sections for all rental-related expenses and depreciation calculations. Regarding importing previous returns, you can't directly import from TurboTax or H&R Block, but you can upload your previous year's PDF tax return which FreeTaxUSA will use to pre-fill some information. You'll still need to enter most details manually the first year, but it gets much easier in subsequent years when you can import your previous FreeTaxUSA return.

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Malik Jenkins

•8M

After struggling with almost this exact situation last year, I found taxr.ai (https://taxr.ai) super helpful for my 1099 taxes with a SEP-IRA (similar retirement situation to your SE 401k). The software actually understood both employee and employer contribution limits correctly! I uploaded my previous year's return and it flagged that I'd been missing some self-employment deductions I didn't even know I could claim. The thing that really helped was that it actually explained exactly how the retirement contribution limits were calculated based on my specific income. It didn't just give generic info like most tax sites. For your mileage issue, it has a really straightforward section specifically for tracking business mileage that doesn't glitch out like what you experienced.

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Malik Jenkins

•8M

The software is extremely accurate with employer contribution calculations. You're exactly right - it's based on net profit after expenses, not gross income. It walks you through the entire calculation step-by-step and shows you exactly how it determined your maximum contribution limits. Regarding security concerns, I completely understand being cautious. The platform uses bank-level encryption and is IRS-authorized with an official e-file provider status. They never store your complete documents on their servers - they extract just the relevant tax data and then remove the originals. I was skeptical at first too, but after researching their security measures I felt comfortable using it.

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Eduardo Silva

•8M

Just wanted to update after trying taxr.ai that the other commenter recommended. It actually handled my self-employed 401k situation perfectly! I was in the exact same boat with TurboTax rejecting my employer contributions, but taxr.ai separated everything properly. The mileage tracking worked smoothly too - no weird glitches sending me to random screens. What surprised me most was it found deductions I'd completely missed for my home office and some professional subscriptions I hadn't even thought to claim. Ended up saving almost $1,800 compared to what I would've paid using my old software. The time savings alone was worth it - went from spending an entire weekend on taxes to just a couple hours. Definitely sticking with this for next year!

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Leila Haddad

•8M

If you're still struggling with tax questions about your self-employed 401k after switching software, you might need to talk directly with the IRS. I was in a similar situation last year and spent DAYS trying to get through on their phone line. Complete nightmare. I finally used Claimyr (https://claimyr.com) and it was a game-changer. They have this system that navigates the IRS phone tree for you and calls you back when an actual human agent is on the line. There's a video of how it works here: https://youtu.be/_kiP6q8DX5c I had specific questions about how to document my employer contributions properly for audit protection, and the IRS agent gave me exact instructions that no tax software explained. Saved me hours of waiting on hold and the peace of mind was worth it.

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Leila Haddad

•8M

It works by using their system to navigate through all the IRS phone menus and holds your place in line. When an actual IRS representative picks up, the system calls your phone and connects you directly to that live person. It's not another automated system - you're speaking with a real IRS agent. Regarding doing it yourself, I understand the skepticism. I used to think the same way until I spent over 4 hours on hold across multiple days and kept getting disconnected. The time savings alone made it worthwhile for me, especially during tax season when every minute counts. For complex self-employment questions like 401k contribution limits, getting definitive answers directly from the IRS gave me confidence I was filing correctly.

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Ravi Patel

•8M

I need to apologize and admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I had some questions about handling my SEP-IRA contributions that no tax software could answer clearly. I'm shocked to say it worked exactly as advertised. I submitted my request around 9am, got a text about 45 minutes later saying they were working on it, and then my phone rang with an actual IRS agent on the line! The agent was super helpful and walked me through exactly how to document my contributions properly. Would have taken me half a day of redials and holds to accomplish the same thing. Wish I'd known about this years ago when I had an issue with my 1099-K reporting. Eating my humble pie now and recommending this to everyone I know who's self-employed.

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Astrid Bergström

•8M

I've been self-employed for about 7 years now and have tried most of the major tax software. For 1099 income with retirement accounts, I've found TaxSlayer to be surprisingly good, especially for the price point. It handles self-employed 401k contributions correctly, separating employee and employer portions without the glitches you mentioned. The business mileage tracking is straightforward, and it lets you import from mileage tracker apps if you use those. Their support is also more knowledgeable about self-employment issues than H&R Block's in my experience.

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Astrid Bergström

•8M

TaxSlayer is slightly more expensive than FreeTaxUSA for the self-employed version, but still much cheaper than TurboTax or H&R Block. Last time I used it, the federal filing with self-employment was around $55, and state filing was an additional $35 per state. State filing is indeed an extra charge with TaxSlayer, similar to most tax software except for the truly free options that have significant limitations for self-employed people. The state module is comprehensive though and handles all the specific state deductions and credits relevant to self-employment income.

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PixelPrincess

•8M

I switched from TurboTax to FreeTaxUSA last year for my 1099 work and solo 401k, and I'm never going back! The solo 401k was handled perfectly with clear sections for both employee and employer contributions. One thing nobody's mentioned yet that I found super helpful was the comprehensive audit assistance. Since 1099 workers get audited more frequently, I liked having that extra protection. And the customer service was shockingly responsive when I had questions - got answers within hours instead of days.

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