I work as a W-2 employee and I pay around 20,000 a year in state taxes and an additional $10,000 a year in property taxes. I also have a side gig that pays around 10–$15,000 a year via 1099 income. I currently file my 1099 income as a sole proprietor.
I am trying to take advantage of Michigan's PTET tax law that allows for a state and local deductions to be paid through certain pass-through entities. Based on Michigan law, if I form an LLC with my wife is a partner, I will be allowed to take advantage of this law.
1-would someone like me with both the W-2 income and 1099 side income be able to take advantage of this?
2-what are the specific logistics involved with initiating this? Do i have to pay taxes throughout the year to a separate account to get this deduction?
3-Is the max amount of tax deducted of state and local taxes based on my 1099 income? ie if I make 10K of 1099 income, can I only deduct 10K from federal taxes?
thanks
