Qualified Business Income Deduction Example 1

Qualified Business Income Deduction Example 1

FACTS: Amy is single and for 2018 has commission income from her real estate sales activities of $55,000, net of her normal business expenses. Amy has no dependent children and claims the standard deduction.

Old Law

  • Net Commission Income
  • 55,000
  • Personal Exemption
  • (4,150)
  • Standard Deduction
  • (6,500)
  • Taxable Income
  • 44,350
  • x Marginal Rate
  • 25%
  • Tax Liability
  • 6,741

New Law

  • Net Commission Income
  • 55,000
  • Business Income Deduction
  • (11,000)
  • Standard Deduction
  • (12,000)
  • Taxable Income
  • 32,000
  • x Marginal Rate
  • 12%
  • Tax Liability
  • 3,650

***Disclaimer: I am a tax accountant and a CPA licensed in Massachusetts , but I am not your accountant or advocate (Unless you have signed up to my services). This communication is not intended as tax advice, and no tax accountant -client relationship results**

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