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

Free 2018 Tax Planning

Tax issues for entrepreneurs making under 157.5K (single), 315K (married)

If you make less than 157.5 K (single) or 315k (married), then your qualified business income deduction is not limited.

However, at this income level, there are other things you should consider besides the qbi deduction.

Entity choice

At this level, it is worth considering an entity change. Take a look at the tax liability of a married taxpayer making 100k.

 

 

 

 

 

As a schedule c taxpayer, he/she pays $20,366.33, as a scorp pays $6,881.64 and as a c corp pays $14,099.53 in taxes. We see the s corp creates the least tax liability.

Number of children

The number of children you have can also affect your entity choice. As a c corporation, you pay taxes through 2 entities: the corporation and your individual tax return. Since your business income is taxed as a separate entity, only the amounts you compensate yourself will be taxed on your individual tax return. This could potentially decrease your tax liability, especially if you have children. Running a test to see if running as a c corporation will be better for you is worth taking a look at.

If running as a c corporation, it is important you pay yourself a reasonable wage.

This templates will help you analyze your specific circumstance. 

For more scenario analysis,click here