thread Tax Season 2019: Is it true there is a new 20% deduction for small business owners? in Archived Discussions (Read Only)

Tax Season 2019: Is it true there is a new 20% deduction for small business owners?

latinotaxpro — Thu, 10 Jan 2019 19:29:47 GMT

Is it true there is a new 20% deduction for small business owners?

Re: Tax Season 2019 FAQ

latinotaxpro — Wed, 09 Jan 2019 18:19:38 GMT

Yes! The new Section 199A QBI deduction can save you big this upcoming tax season. Check it out: https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-business-income-deduction-faqs

Re: Tax Season 2019 FAQ

VanKalkerFarms — Wed, 09 Jan 2019 21:53:04 GMT

that is good information about the pass-through tax break that might help a lot of Square small businesses.

Re: Tax Season 2019 FAQ: Is it true there is a new 20% deduction for small business owners?

katieand — Wed, 09 Jan 2019 21:48:23 GMT

Thanks @latinotaxpro for sharing this info! @VanKalkerFarms, @latinotaxpro is one of our new community partners. Their org provides knowledge and community to those serving Latino taxpayers. 🙏

Re: Tax Season 2019 FAQ

latinotaxpro — Wed, 09 Jan 2019 22:17:43 GMT

Yea, also taxpayers can begin filing after January 28th!

https://www.irs.gov/newsroom/irs-confirms-tax-filing-season-to-begin-january-28

Re: Tax Season 2019 FAQ

latinotaxpro — Thu, 10 Jan 2019 18:08:12 GMT

Yup, here's a simple example of how it works:

Taxpayer with a Schedule C Filing Single

$100,000 Net Profit from Schedule C (this is your Qualified Business Income QBI)

Total Income $100,000

Single Standard Deduction <$12,000>

SE Tax Deduction <$7,650>

Taxable Income $80,350

Take the lesser of:

20% of QBI = (20%) * ($100,000) = $20,000 or

20% of Taxable Income = (20%) * ($80,350) = $16,070

Your QBI Deduction is $16,070

What does this do? It lowers your taxable income

New Taxable Income $80,350 - $16,070 = $64,280

You now pay tax on $64,280 instead of $80,350