“If you’re a freelancer, sole proprietor, or small-business owner, you should know that some of the biggest changes from tax reform will impact you this year, including a new deduction: Qualified Business Income Deduction,” said Mark Steber, Chief Tax Officer of Jackson Hewitt. “Self-employed workers and small business owners may be eligible for the new 20-percent deduction for pass-through businesses on their qualified business income, saving them money on their taxes.”
Qualified Business Income Deduction (QBID) is available to taxpayers whose taxable income is below $157,500 for individuals or $315,000 for joint returns. Qualified business income (QBI) is income from a trade or business in the United States such as rideshare driving, consulting fees, internet or flea market sales, and reselling income to name a few. Employee wages and business generated capital gains, interest, and dividend income are excluded.
Don’t miss out on this deduction. Jackson Hewitt Tax Pros also remind self-employed taxpayers of seven common tax deductions that they may qualify for this tax filing season:
- Maintenance and repairs for vehicle upkeep and expenses, including oil, registration fees, insurance, parking fees and tolls, and depreciation (if the taxpayer owns the car or truck), or leasing costs: These may include the fees paid to a cab company for using its cars, or rental fees for a truck driver's trailer. Make sure you keep a log of all your expenses, the miles you drive for business, and your total mileage for the year. You must have all the miles and all the expenses to determine the business portion of the expenses.
- Travel expenses including transportation, lodging and incidental expenses such as laundry, phones, maid service, and others.
- Cost and maintenance of special work clothing. To be deductible, the clothing must be required for work and not suitable for everyday use, for example, safety shoes for a building contractor while on the construction site.
- State and local government licensing and regulatory fees as well as liability insurance premiums.
- Union and trade association dues as well as subscriptions to trade publications.
- The expenses associated with a home office as well as equipment and supplies.
- Continuing education for self and employees.
Individuals who are paid $600 or more in self-employment income can expect to receive a Form 1099-MISC, and individuals who are paid through a third party such as rideshare companies, who are paid at least $20,000 or have at least 200 transactions will receive a Form 1099-K. If a 1099-MISC, or 1099-K is not received the income must still be reported.
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About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission to provide its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead with Maximum Refund and 100% Accuracy Guarantees. With close to 6,000 franchised and company-owned locations, including 3,000 in Walmart stores, and online and mobile tax solutions, Jackson Hewitt makes it convenient for clients to file their taxes. For more information about products, services, and offers, or to locate a Jackson Hewitt office, visit www.jacksonhewitt.com or call 1 (800) 234-1040.
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