Welcome Guest. Register Now!  

LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-20-2018, 02:05 AM
Junior Member
Join Date: Sep 2013
Posts: 3
How's that 20% deduction on passthrough income going to work in practice?

Hello all! I am a longtime freelance sole proprietor who has a pretty good handle on how my taxes work, but I'm having a hard time getting my head around how the new 20% deduction for pass-through entities work? I'm trying to estimate my 2018 taxes as I go along and obviously this is going to have a huge impact. I've pretty much figured out that my income as a sole proprietor counts as "Qualified Business Income," so let's leave that question aside for the moment.

My understanding is that, in order to mirror the cut in the corporate tax rate, sole proprietors get to deduct 20% of their QBI. My question is, where exactly on our tax form will this deduction happen? I have an accountant friend who said it "doesn't lower your AGI, but rather it lowers the amount of taxable income you have" which is still a little obscure to me. Is the way to think of it as an additional deduction that I subtract from my AGI, after my standard/itemized deduction?

Thanks in advance for any guidance you can offer. It's crazy to me that we're halfway through Q1 and the IRS still hasn't released the 1040-ES for 2018!

Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Art work as an Itemized Deduction hookdog Itemized Deductions 1 11-22-2015 06:41 AM
LLC Passthrough mrozel Limited Liability Company 0 12-04-2014 02:36 PM
Worthless Stocks - Best Practice Puma2020 For 2014 2 11-25-2014 11:18 PM
Work at Home? You May Qualify for the Home Office Deduction Samatg For 2011 0 03-13-2012 10:37 PM
deduction for pro-bono work? QJQJ Itemized Deductions 1 10-29-2010 08:13 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 » Income
 » IRA/Sep
 » Medical
 » Payroll
Forum for CPAs
Financial Planning