new pass-through 20% reduction to income

[RWG1950]

Will the new tax law's pass-through provision also affect a one person tax prep/investment broker schedule "C" filer as well ?

If yes - would the 20% reduction come off gross, net or taxable schedule "C" income ? It is my understanding though, that all net (taxable) "C" income would remain taxable for SE purposes up to the wage base.

[TaxGuyBill]

Yes, but because it is a 'personal services' business, their "taxable income" (Line 43 of the current 1040) needs to be less than the phase-out threshold (it starts phasing out at $157,500/$315,000). If "taxable income" is over $207,500/$415,000, the credit is completely phased out (regardless of any W-2 wages or Qualified Property).

The 20% reduction is based on the lower of (1) business profit, and (2) "taxable income" (Line 43 of the current 1040).

Yes, the 20% deduction does not affect SE tax.

[John of PA]

Yes, 20% of the net Sch C will be the deduction and correct there is no reduction or deduction in regards to the SE tax, the 15% SE tax is still on the full Sch C profit.