Free 2018 Tax Planning2019-01-05T15:05:52+00:00

Free 2018 Tax Planning

Limitations

If you are a business owner with income under $315,000 for married filers and $157,500 for single filers, then there is not much to worry about.

However, things get complicated when you go over this threshold. The complications are split between

  1. General businesses above the threshold
  2. Specified service businesses above the threshold

General businesses above the threshold

As a general business above $315,000 for married filers and $157,500 for single filers, the QBI deduction is subject to phase out limitations. In other words, you get a reduced amount proportional to how far you are from the threshold.

However,  when income exceeds $415,000 for married filing jointly and $207,500 for other filing statuses , your deduction for QBI cannot exceed the greater of:

  1. 50% o W-2 wages paid with respect to the qualified trade or business,
  2. The sum of 25% of such wages plus 2.5% of the unadjusted basis immediately after buying the asset.

See tax planning excel template for help calculating this amount.

Specified service businesses above the threshold

As a specified service business above $315,000 for married filers and $157,500 for single filers, the QBI deduction is subject to phase out limitations. In other words, you get a reduced amount proportional to how far you are from the threshold.

The deduction is  not available to specified service businesses if total income exceeds $415,000 for married filers, and $207,500 if single.

 

See tax planning excel template for help calculating this amount.