Microstock Photography Forum - General > Newbie Discussion
Qualified Business Income (QBI) Deduction for Stock?
JohnTravolski:
2020 was my first year earning a significant amount from selling stock. I have only ever had W2 income before then, so self-employment income is basically brand new to me. Do you guys fill out form 8995 (Qualified Business Income Deduction - Simplified Calculation) as a sole proprietor? Does stock income count as "Qualified Business Income?" If so, how do you calculate the qualified business income or (loss) (line c)?
My understanding that it would be calculated as the Net profit or loss from Schedule C minus the sum of lines 14 through 16 on Schedule 1 (deductible part of SE tax, any self-employed pretax retirement account contributions, and self-employed health insurance deductions, respectively). Does that sound right to you?
Also, as a sole proprietor, would the business name (line a) just be my name?
angelawaye:
Do you file a Schedule C? My software automatically did it for me and I did qualify.
This deduction is amazing and I'm really hoping Biden does not reverse it.
Uncle Pete:
--- Quote from: angelawaye on January 29, 2021, 07:20 ---Do you file a Schedule C? My software automatically did it for me and I did qualify.
This deduction is amazing and I'm really hoping Biden does not reverse it.
--- End quote ---
LOL has nothing to do with Biden or any of the recent political BS.
I've been filing out schedule C since about 1970, standard part of reporting income/expenses, profit or loss from a business. When we don't get a W-2 because we are paid commissions or in reality self employed - freelance artists, the schedule C is required.
https://www.irs.gov/instructions/i1040sc
Yes you can use it to record profits, which you have to do by law, as people who pay us file 1099s which go to the IRS. But also you can use expenses to your benefit. Keep Good Records and documentation! You can charge of expenses like mileage, equipment can be depreciated, and there are other costs of doing business that are allowable deductions.
History Note: 1862 - President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation's first income tax.
Sean Locke Photography:
--- Quote from: Uncle Pete on January 29, 2021, 10:16 ---LOL has nothing to do with Biden or any of the recent political BS.
--- End quote ---
Actually, pass-through owners who qualify can deduct up to 20% of their net business income from their income taxes. It was a nice break that happened under the orange clown in 2018. https://www.nolo.com/legal-encyclopedia/the-new-pass-through-tax-deduction.html
To the OP, I just enter the numbers that Turbo Tax wants, and it magically happens.
angelawaye:
The QBI (Qualified Business Income Deduction) was apart of Trump's Tax breaks for small businesses. It wasn't available years ago so that is why I was worried the new admin might get rid of it. I didn't mean to get political so I'm sorry if I upset you. Hopefully you took advantage of it.
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