Tax Deferral and How to contribute to solo 401k
As tax season is approaching, I'm trying to find more ways to reduce my taxable income to get down to the more favored brackets.
If I have passive income (rent) coming into an LLC, can I pay myself a management fee to count as income to invest into the solo 401k? It sounds like this strategy means I show regular taxable income, then put it into tax deferred, which is really net 0 gain. This seems a good way to grow the 401k, but not reduce or defer taxes.
My solo 401k plan includes profit sharing. Is there a way to leverage profit sharing to reduce my taxable income?
Quickly into active income: is self-employment income based on gross? Or net? i.e. I make $20 consulting, but spend $10 on advertising and other expenses. Can I contribute $20 or $10?
Are there any strategies that make sense to reduce my taxable income? I cannot qualify as a RE Pro, nor can my wife. Maybe next year she can, but not currently. Other thoughts? I would really like to wield the 401k to it's highest potential, but as additional/alternate strategies I can max non-Roth IRAs and do charitable donations. All your thoughts welcome and appreciated!