The upcoming tax year brings in a lot of changes for self-employed and business taxpayers.
Taxpayers with sole proprietorship, partnerships, trusts, and S corporations will face some difficulties when they’re ready to file for the 2019 tax season because of the Tax Cuts and Jobs Act (TCJA).
Read below for the changes you need to know for your business taxes.
Here’s what qualifies as business income.
In order to have qualified business income (QBI), it must be domestic income from a trade or business. Your qualified business income (QBI) is calculated into a net amount and does not include employee wages, capital gain, interest and dividend income.
The maximum deduction increases.
Prior to the TCJA, you could deduct up to $500,000 for any section 179 property. It has now increased to $1 million. The phase-out threshold also increases from $2 million to $2.5 million. (Subject to change due to inflation.)
The new 20% deduction.
Continue reading “How the Tax Cuts and Jobs Act Affects Businesses”
Be ready for the new tax reform.
Get your to do list out and take some action to reduce your 2018 taxes now! Although taxpayers might be hurriedly finishing their 2017 tax returns before the e-file deadline, some tax deductions will not be there for the next tax season due to the Tax Cuts and Jobs Act. (TCJA) Ultimately, the design of the new tax reform is to lower taxes for individuals of all income groups until 2025. Bear in mind that along with that idea, many individuals who itemize their deductions are worried about the tax turmoil they’ll face when filing with each capped or eliminated deduction.
Did you know that can take steps in 2018 to decrease your taxes for next tax season? Here’s a few tax tips for you.
Rack up your medical receipts.
Continue reading “Tax Reform: Tax Tips for Lowering Rates for 2018 Taxes!”
Don’t let your 1099-K stand in the way of business.
If you’re an Uber driver, run an Etsy shop, or rent out your home to AirBNB frequenters, then you might notice a new tax form that has found it’s way into your mailbox in recent years.
It’s nothing to stress over. This is generally a straightforward form to review, and easy to report on your tax return.
What is a 1099-K?
Form 1099-K, otherwise known as Payment Card and Third Party Network Transactions, is one of the more recently introduced tax forms. It was created by the IRS in order to report income received from online electronic payments (e.g. credit cards, PayPal, debit cards, etc.) through third party processors. Prior to this form, many independent contractors who used online payment methods were left confused on how to report those sales on their tax returns.
Who gets a 1099-K?
Wondering if you’re one of the lucky ones who will get a 1099-K this year? The qualifications are somewhat more specific compared to other forms such as the W-2. With a 1099-K, it is based on sales volume.
Retailers who accept online credit card payments will receive a 1099-K from any business that processed their payments. However, the 1099-K is only mandatory if online processing meets the following stipulations:
- Sales volume is over $600 per year via credit card companies.
- Sales volume is over $20,000 and more than 200 individual transactions were made via third party processors.
Continue reading “The 5 Ws of a 1099-K”