popntx
Dryer sheet aficionado
I've been working on estimating my 2018 taxes in order to determine how much I can convert from my traditional IRA to a Roth IRA for the 2018 tax year and stay within the 12% bracket. I had used both the OLT tax estimator and the 2018 Federal Income Tax Excel Spreadsheet (Draft) and came up with identical results.
I then tried FreeTaxUSA and it came up with a new wrinkle that I'd never heard of. After inputting all of my data, it calculated an additional "Qualified Business Income Deduction" that I could take. I submitted a question to FreeTaxUSA asking what this was all about, and they informed me that because I have rental income on a rent house that I own, I am considered an "active participant in the rental and the income/loss is at risk, so it is considered business income. Therefore, our software used the: 2018 Qualified Business Income Deduction Simplified Worksheet."
They referred me to the IRS worksheet and sure enough it calculates a 20% deduction of the net income on the property.
I passed this by my tax man and he said it was his understanding that my rental property is not a "business" and that the deduction is for S Corporations. He said he was going to school in a couple of weeks and find out.
So, I have 2 questions. I know this is really getting into the "tax weeds", but is anyone familiar with this particular deduction? And are there any other good 2018 tax estimators out there? I looked at turbo tax and couldn't figure out how to use it to estimate 2018 taxes.
Thanks!
I then tried FreeTaxUSA and it came up with a new wrinkle that I'd never heard of. After inputting all of my data, it calculated an additional "Qualified Business Income Deduction" that I could take. I submitted a question to FreeTaxUSA asking what this was all about, and they informed me that because I have rental income on a rent house that I own, I am considered an "active participant in the rental and the income/loss is at risk, so it is considered business income. Therefore, our software used the: 2018 Qualified Business Income Deduction Simplified Worksheet."
They referred me to the IRS worksheet and sure enough it calculates a 20% deduction of the net income on the property.
I passed this by my tax man and he said it was his understanding that my rental property is not a "business" and that the deduction is for S Corporations. He said he was going to school in a couple of weeks and find out.
So, I have 2 questions. I know this is really getting into the "tax weeds", but is anyone familiar with this particular deduction? And are there any other good 2018 tax estimators out there? I looked at turbo tax and couldn't figure out how to use it to estimate 2018 taxes.
Thanks!