Let's consider a hypothetical tax environment I may end up in 2021 and try to find legit answers.
Household: Single, no dependents
Business type: Software services
Source of income:
- C2C contract as a sole proprietorships
- W2 employment, employer withheld taxes
Expected total gross income:
- $180 000 from sole proprietorships business
- $130 000 from W2 employment
Retirement total contributions:
a) $45 000 (25%) to SEP simple from sole proprietorships income
b) nothing from W2
Questions:
1. Does pass-though 20% deductible applicable for remaining taxable $135000 from business regardless W2 taxable $130000?
2. What's the difference between 157000 and 207000 thresholds for single when we are talking about qualification for pass-though 20% deductible?
3. Now let's add additional information. There is an accumulated $100 000 investment loss carried over from 2019. What is an additional deductible we can consider from both sources of income after 20% pass-through?
4. What should I keep an eye on to minimize tax withholdings for the given example?
