Qualified Business Income Deduction Example 2
on 08/2/2019 at 5:55 am
FACTS: Andy and Emma are married with two dependent children. Andy earns net commission income of $45,000, and Emma earns a salary of $45,000. They have itemized deductions of $18,000, comprised of mortgage interest, state and local taxes, and charitable contributions.
Old Law
- Net Commission Income
- 45,000
- Salaries & Wages
- 45,000
- Personal Exemption
- (16,600)
- Itemized Deductions
- (18,000)
- Taxable Income
- 55,400
- x Marginal Rate
- 15%
- Tax Liability
- 7,358
- Child Tax Credit
- (2,000)
- Net Tax Liability
- 5,358
New Law
- Net Commission Income
- 45,000
- Salaries & Wages
- 45,000
- Business Income Deduction
- (9,000)
- Standard Deductions
- (24,000)
- Taxable Income
- 57,000
- x Marginal Rate
- 12%
- Tax Liability
- 6,459
- Child Tax Credit
- (4,000)
- Net Tax Liability
- 2,459
***Disclaimer: This communication is not intended as tax advice, and no tax accountant -client relationship results**
