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

Free 2018 Tax Planning

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

If you are taxpayer making over 157.5 k if single or 315k if married, then your qualified business income deduction (QBI) will be reduced.

By how much depends on whether you are a specified business or general business.

Click here to see how these limitations affect you.

Strategy for entrepreneur with general business over 415k 

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.

If you are above this limit, it is recommended to do an analysis to find out:

  1. If being a c corporation will be better for you, especially if you are specified business. The change in tax liability could be quite huge.
  2. If paying yourself more wages will be helpful

These templates will help you analyze both circumstances and more. 

Take a look at this sample analysis for an entrepreneur making 350k. On the left he chose to pay no wages and on the right he paid 50k in wages saving him over 6k in taxes.

You can download more sample analysis here.