Taxpayers who will have business income that they will report on Schedule C, E or F on their 2018 federal income tax return and therefore may need to make 2018 estimated tax payments will need to take into account the following changes that go into effect in 2018 due to the recently passed Tax Cuts and Jobs Act.
20% Deduction for Pass-Through Income
Sole proprietors that are filing Schedules C, E or F for 2018 will need to be sure that they take into account the new 20% deduction for pass-through income that was included in the Tax Cuts and Jobs Act.
Generally for individual’s that have income from a Schedule C, E or F and their taxable income is below $157,500 ($315,000 for joint filers), they may take a deduction of the lesser of (1)20% of the income from their business or (2) 20% of their taxable income excluding capital gains.
If their taxable income exceeds $157,500 ($315,000 for joint filers) then the deduction will be limited as follows:
A specified service trade or business is a business in the fields of:
The IRS will need to provide further guidance on this deduction so that taxpayers that may qualify for it can calculate it correctly in all situations which is the reason the 2018 Form 1040-ES has not been released yet.
A deduction for entertainment expenses is no longer allowed on Schedule C beginning in 2018.
Bonus Depreciation and Increased Section 179 Expense
Depreciation Limits for Luxury Automobiles and Personal Use Property (Listed Property)
The yearly limitations for passenger autos placed in service after December 31, 2017 have been increased as follows:
For other Tax Cuts and Jobs Act provisions that that may affect the calculation of an individual’s 2018 estimated tax payments see the New Federal Tax Law Changes Included in the Tax Cuts and Jobs Act page in the Tax Resource Center on the Crosslinktax website.
2018 Federal Return and Taxpayer Expectations
January 30, 2019
Reminder of 2018 Itemized Deduction Changes
January 16, 2019
Qualified Business Income Deduction (20% Deduction for Certain Pass-Through Income)
January 9, 2019
Reminder of Form 1040 Redesign
January 2, 2019
Important Reminders for the Upcoming 2019 Filing Season
November 28, 2018
2018 Changes to Form 8867 (Preparer Due Diligence Checklist)
November 9, 2018