think of LLC's and sole propreitorships as category 1. first the net schedule c income must be reduced by related expenses such as 1/2 the self-employment tax, pension/401k, self-employed health insurance and any other directly related expenses. the 20% is applied to the net. also qualifying as a separate category, for the 20% are certain REIT dividends and income from Publicly Traded Partnerships
income from partnerships and S-Corps also qualify for the 20% and they are lumped in with LLCs and sole proprietorships as category 1 type items. they too mus be reduced by related expenses
for each category losses are netted against income.
so $100,000 net schedule C income would be offset by $100,000 S-Corp loss resulting in a net of $0 income qualifying for the 20%
there is also a limit if your business is a specified service trade or business
as defined in the iRS regs
For taxpayers with taxable income above the phase-in range, an SSTB is not a qualified trade or business. Section 199A, through reference to section 1202, defines an SSTB as a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners. The trade or business of the performance of services that consist of investing and investment management, trading, or dealing in securities (as defined in section 475(c)(2)), partnership interests, or commodities (as defined in section 475(e)(2)) is also defined as an SSTB for purposes of section 199A. Further, section 199A looks to the trade or business of performing services involving one or more of the listed fields, and not the performance of services themselves in determining whether a trade or business is an SSTB. The designation of a trade or business as an SSTB applies to owners of the trade or business, regardless of whether the owner is passive or participated in any specified service activity. Accordingly, it is both necessary and consistent with the statute and the legislative history to expand the definitions of the fields of services listed in section 199A(d)(1) and (2) and §1.199A-5 beyond those provided
employee compensation doesn't qualify for the 20%
TT handles the 20% thru a section in the input
since you say you are engaged in consulting, this would appear to be a SSTB and thus you would be subject to limitations if your taxable income was above $160,700 for 2019 for single person it would go away completely if taxable income was $210,700 (if married $421,400)
since you say you'll have a loss for 2019, here's some bad news. under the law, this QBI loss must be carried forward for purposes of computing next year's QBI deduction. so if the QBI loss for 2019 is $10,000 and the year after you have a $20,000 QBI profit, only $10,000 would qualify for the QBI deduction and again since you are IN a SSTB you would be subject to the income limitations in 2020
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When using the COGS section (Cost of Goods Sold) what you pay for inventory is *not* a deductible expense until the tax year you actually sell that inventory. It does not matter in what year you purchased that inventory either. So if you are "in fact" using the COGS section to keep track of your inventory, when you close the business you *MUST* show the disposition of any remaining inventory. If you do not sell it before closing the business, then the correct disposition of that inventory is "removed for personal use". That's it.
Removing it from the business for personal use will have absolutely no impact what-so-ever on your tax liability. But if you want to take that inventory you removed for personal use and donate it to a qualified charity, then you can claim that donation as a SCH A itemized deduction. However, if the total of all of your itemized deductions do not exceed your standard deduction, then it will still have "no impact what-so-ever" on your tax liability.
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Already answered in your other post ... https://ttlc.intuit.com/community/tax-credits-deductions/discussion/section-179-deductions-for-relatively-new-sole-proprietorship-with-neither-clients-nor-income/01/960004
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Simple answer: It is NOT mandatory that you issue your day care provider a W-2. It is mandatory that you report her name, SS#, and the amount you paid her on IRS form 2441, which is filed with your tax return when you use tax free FSA benefits (or claim the day care credit).
As the other replies indicate, there are other complications and issuing her a W-2 helps reduce those. The fact that she has no other income, impacts whether she has to file a tax return and whether you may hear from the IRS about your FSA benefits.
If you paid her more than $4200 for 2019, she cannot be your dependent (she fails the income test).
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I just cancelled as well. Feel like I have been ripped off all of these years for being a loyal customer. Agree with earlier posts about buying only from reputable sites, like Costco or Amazon. In the past have bought supplemental TurboTax titles form Sears Marketplace of all places.
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