Please help me understand some of the nuances of this act and how I might best implement it.
I am a small Sole Proprietor who grossed $23K this year. We are talking pennies here but I think the answers will scale to your business.
Basically, I think the act allows me to deduct 20% from my net proceeds, thus reducing this value and my tax liability by 20%.
These funds will be taxed at 22% due to additional W2 money.
Does this mean there is only a 2% benefit for deducting expenses from my gross to make a smaller net proceeds value?
I made an $10000 capital purchase this year that could have accelerated depreciation applied. This would lessen my Net by 10K, and my QBI decuction by $2K.
OR
I could extend the depreciation out to five years and have $6K of deductions left for 2026-7-8, when the TCJA may expire.
The next part of the question has to do with normal business expenses.
It would seem at my level of finance that it might be better to have minimal expenses (that could potentially trigger an audit) and just be satisfied with the 20 percent they are giving me for free with no receipts at all.
Two percent improvement on $5000 worth of expenses is only paying me $100 to manage a pile of receipts and possibly trigger an audit.
Do I understand this program correctly?
I am a small Sole Proprietor who grossed $23K this year. We are talking pennies here but I think the answers will scale to your business.
Basically, I think the act allows me to deduct 20% from my net proceeds, thus reducing this value and my tax liability by 20%.
These funds will be taxed at 22% due to additional W2 money.
Does this mean there is only a 2% benefit for deducting expenses from my gross to make a smaller net proceeds value?
I made an $10000 capital purchase this year that could have accelerated depreciation applied. This would lessen my Net by 10K, and my QBI decuction by $2K.
OR
I could extend the depreciation out to five years and have $6K of deductions left for 2026-7-8, when the TCJA may expire.
The next part of the question has to do with normal business expenses.
It would seem at my level of finance that it might be better to have minimal expenses (that could potentially trigger an audit) and just be satisfied with the 20 percent they are giving me for free with no receipts at all.
Two percent improvement on $5000 worth of expenses is only paying me $100 to manage a pile of receipts and possibly trigger an audit.
Do I understand this program correctly?
Statistics: Posted by Workinprogress — Sat Dec 21, 2024 12:26 pm