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IRS 1040 Personal Taxes

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  • Form IRS 1040
  • Schedules A, B, C, CEZ, D, E, F, H, J, EZ, R, SE
  • 8812 Child Tax Credit

Schedule A (Form IRS 1040), Itemized Deductions

Information about Schedule A (Form IRS 1040), Itemized Deductions, including recent updates, related forms and instructions on how to file. Schedule A (Form IRS 1040) is used by filers to report itemized deductions.

Schedule B (Form IRS 1040A or IRS 1040), Interest and Ordinary Dividends

Form IRS 1040 Schedule B is used by filers to report interest and ordinary dividend income. Information about Schedule B (Form IRS 1040A or IRS 1040), Interest and Ordinary Dividends, including recent updates, related forms and instructions on how to file. Use Schedule B to report your taxable interest or ordinary dividends.

Schedule C Form IRS 1040, Profit or Loss From Business

Schedule C (Form IRS 1040) is used to report income or loss from a business operated or a profession practiced as a sole proprietor. Also, use Schedule C to report wages and expenses that occurred as a statutory employee. Publication 525 discusses many kinds of income (money, property, or services) and explains whether they are taxable or nontaxable. Use this schedule to report income or loss from a business you operated or a profession you practiced as a sole proprietor.

Schedule C EZ (Form IRS 1040), Net Profit From Business

Schedule C-EZ (Form IRS 1040) is used instead of Schedule C by qualifying small businesses and statutory employees with expenses of $5,000 or less. You can use this schedule if you operated a business or practiced a profession as a sole proprietorship or qualified joint venture, or you were a statutory employee and you have met all the requirements listed in Schedule C-EZ, Part I.

Schedule D (Form IRS 1040), Capital Gains and Losses

Form IRS 1040 Schedule D is used to report sales, exchanges or certain involuntary conversions of capital assets, certain capital gain distributions, and non business bad debts. The form includes the tax computation using maximum capital gain rates. Use this schedule to report the sale or exchange of capital assets, gains from involuntary conversions of capital assets, capital gain distributions and non business bad debts.

Schedule E Form IRS 1040

Information about Schedule E (Form IRS 1040), Supplemental Income and Loss, including recent updates, related forms and instructions on how to file. Schedule E (Form IRS 1040) is used by filers to report income from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in real estate mortgage investment conduits (REMICs).

Schedule EIC (Form IRS 1040A or IRS 1040), Earned Income Credit

Schedule EIC (Form IRS 1040) is used by filers who claim the earned income credit to give the IRS information about the qualifying child. After you have figured your earned income credit (EIC), use this schedule to give the IRS information about your qualifying child.

Schedule 8812 (Form IRS 1040) is used by taxpayers to calculate and report both the Child Tax Credit and the Additional Child Tax Credit. Use Part I of this schedule to document that any child for whom you entered an ITIN and for whom you also checked the “if qualifying child for child tax credit” box, is a resident of the United States because the child meets the substantial presence test and is not otherwise treated as a nonresident alien. Use Parts II–IV of Schedule 8812 to figure the additional child tax credit.

Schedule F (Form IRS 1040), Profit or Loss From Farming

Information about Schedule F (Form IRS 1040), Profit or Loss from Farming, including recent updates, related forms and instructions on how to file. Use this schedule to report farm income and expenses.

Schedule H Form IRS 1040

Schedule H (Form IRS 1040) is used by household employers to report household employment taxes. Schedule A (Form 940) is used by every employer who had 4 or more employees on at least one day of each of 20 calendar weeks in a calendar year to file a return on Form 940 for such year. Use this schedule to report household employment taxes if you paid cash wages to a household employee and the wages were subject to social security, Medicare, or FUTA taxes, or if you withheld federal income tax.

Schedule J Form IRS 1040

Information about Schedule J (Form IRS 1040), Income Averaging for Farmers and Fishermen, including recent updates, related forms and instructions on how to file. Use this schedule to elect to figure your income tax by averaging, over the previous 3 years (base years), all or part of your taxable income from your trade or business of farming or fishing.

Schedule R (Form IRS 1040A or IRS 1040), Credit for the Elderly or the Disabled

Information about Schedule R (Form IRS 1040), Credit for the Elderly or the Disabled, including recent updates, related forms and instructions on how to file. Use this schedule to figure the credit for the elderly or the disabled.

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New Tax Cuts

As of January 1, 2018, the Tax Cuts and Jobs Acts offers a 20% deduction for qualified business income pass-through entities. The owner of a sole proprietorship, S-Corporation, or partnership is entitled to take a deduction equal to 20% of the “qualified business income” earned from the business. Qualified business income is the non-investment income of the business – the revenue the business was intended to generate minus expenses. It does not include income such as interest, dividend income, or capital gains from the sale of property.
Prior to the Tax Cuts and Jobs Act, income from these small businesses would pass-through to the business owner on his or her own taxes and was subject to individual rates as high as 39.6%. Now, the qualified business deductions effectively lower that top marginal tax rate down to about 29.6%.
Prior to the Tax Cuts and Jobs Act, income from these small businesses would pass-through to the business owner on his or her own taxes and was subject to individual rates as high as 39.6%. Now, the qualified business deductions effectively lower that top marginal tax rate down to about 29.6%.
The qualified business deduction is limited to the lesser of:
    20% of qualified business income, or
    50% of the W-2 wages of the business.
In some, very rare cases, the deduction may be equal to 25% of the W-2 wages of the business plus 2.5% of the unadjusted bases of the business’s assets.
If the business owner is married and files jointly and the total taxable income of the business owner is less than $315,000 annually ($157,500 if single), the 20% of qualified business income is automatically taken. If the total taxable income of the business owner is more than $415,000 annually ($207,500 if single), the 50% of the W-2 wages of the business applies in full. Between $315,000 and $415,000 of taxable income, there is a phase-out and the business owner is able to deduct the lesser of the 20% of the qualified business income or 50% of the W-2 wages of the business.
For example, Mark, a married taxpayer, operates a business as a sole proprietor. The business has one employee who is paid $50,000 during 2018. The business has no significant assets. During 2018, the business generates $200,000 of income to Mark and Mark’s total taxable income, after deductions, is $215,000. Mark is entitled to a deduction of $40,000 ($200,000 x 20%). The W-2 wage limitation – which would have been $25,000 ($50,000 x 50%) does not apply because Mark’s taxable income is less than $315,000.
If all these facts remain true but the business generates $400,000 of income to Mark and, after deductions, his taxable income is $450,000, Mark’s deduction is limited to $25,000. Mark’s income is now over the $415,000 threshold so he is limited to the lesser of:
    20% of $400,000, which equals $80,000
    50% of W-2 wages $50,000, which equals $25,000.
The qualified business deduction includes certain rules designed to deter high-income taxpayers from attempting to convert wages or other compensation for personal services into income eligible for the deduction. For taxpayers who are married filing jointly with taxable income above $315,000 ($157,000 if single), an exclusion from qualified business income begins to be phased in for income of “specified service” trades or businesses.
Specified services are defined as any trade or business involving the performance of services in the fields of health, laws, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of the trade or business is the reputation or skill of one or more of its employees. However, architects and engineers are excluded from the definition of specified services.
The qualified business deduction is a significant potential tax break for business owners, but it comes with a great deal of complexity and uncertainty. At this time, how the tax forms will be modified to accommodate the new deduction and what information will be required to be reported by pass-through entities to their owners to calculate the deduction is unclear.
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Accounting and Operations

Setting up a small or medium enterprise involves multiple challenges. One such challenge right at the beginning is setting up sound and reliable accounting and operating procedures. Accounting and operating procedures are the fundamental functions and the key cores of any business. Business decisions rely heavily upon the financial information at all stages from planning to execution. Efficient accounting and operating procedures ensures that the business runs smoothly and similarly, all future growth is possible only if the books are in good and accurate order.  Data, statements and projection are all vital financial figures to which an entrepreneur must have ready and round the clock access for sound business performance.