# Qualified Business Income Deduction



## jhearcht (Feb 16, 2018)

I just noticed a new line on the 1040 form for 2018 : Qualified Business Income Deduction (up to 20%). I don't understand the point of this deduction, and It probably won't make any difference for me, since my taxable income is negative . . . but for future reference, I'd like to know if a self-employed UBER driver is a qualified "pass through" business. Is Rideshare a "service trade"? To my uncomprehending layman's eyes, this sounds like just another loophole for mega-corporations to avoid paying taxes. 

https://www.irs.gov/newsroom/tax-cu...199a-qualified-business-income-deduction-faqs


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## Launchpad McQuack (Jan 8, 2019)

I've done some reading on this. What I have found is that the law is vaguely written (like any good law), and a lot of tax professionals are not clear how it should be interpreted. I have read statements by several tax professionals saying that they are just going to have to wait for some cases to go through tax court before it becomes clear exactly what is allowed and what is not allowed.


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## UberTaxPro (Oct 3, 2014)

Launchpad McQuack said:


> I've done some reading on this. What I have found is that the law is vaguely written (like any good law), and a lot of tax professionals are not clear how it should be interpreted. I have read statements by several tax professionals saying that they are just going to have to wait for some cases to go through tax court before it becomes clear exactly what is allowed and what is not allowed.


It's fairly clear now, the IRS has recently brought more clarification to the table. Remember most of the changes in the TCJA are only good till 2025 and it takes time for issues to resolve through the courts.


jhearcht said:


> I just noticed a new line on the 1040 form for 2018 : Qualified Business Income Deduction (up to 20%). I don't understand the point of this deduction, and It probably won't make any difference for me, since my taxable income is negative . . . but for future reference, I'd like to know if a self-employed UBER driver is a qualified "pass through" business. Is Rideshare a "service trade"? To my uncomprehending layman's eyes, this sounds like just another loophole for mega-corporations to avoid paying taxes.
> 
> https://www.irs.gov/newsroom/tax-cu...199a-qualified-business-income-deduction-faqs


Yes, a ride-share driver is eligible for the section 199A (20%) deduction.
Actually the idea for this was to make an even playing field for small businesses vs large corps. Corporations (c corps) had their tax rate lowered, the 199A deduction is a reward to small businesses because their tax rates were not lowered. Corporations ( c corps ) are not eligible for the 199A deduction.


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## AuxCordBoston (Dec 3, 2016)

jhearcht said:


> I just noticed a new line on the 1040 form for 2018 : Qualified Business Income Deduction (up to 20%). I don't understand the point of this deduction, and It probably won't make any difference for me, since my taxable income is negative . . . but for future reference, I'd like to know if a self-employed UBER driver is a qualified "pass through" business. Is Rideshare a "service trade"? To my uncomprehending layman's eyes, this sounds like just another loophole for mega-corporations to avoid paying taxes.
> 
> https://www.irs.gov/newsroom/tax-cu...199a-qualified-business-income-deduction-faqs


Change your return to show taxable income and then take the 20% deduction. Lol


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## hrswartz (Jan 4, 2019)

I didn't know what a "pass through business" was so I googled it and got this definition :
A pass-through entity is a special business structure that is used to reduce the effects of double taxation. Pass-through entities don't pay income taxes at the corporate level. Instead, corporate income is allocated among the owners, and income taxes are only levied at the individual owners' level.
Does this apply to ride share operators? I take the standard deduction but then I don't have that much income as I drive part time...


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## AuxCordBoston (Dec 3, 2016)

hrswartz said:


> I didn't know what a "pass through business" was so I googled it and got this definition :
> A pass-through entity is a special business structure that is used to reduce the effects of double taxation. Pass-through entities don't pay income taxes at the corporate level. Instead, corporate income is allocated among the owners, and income taxes are only levied at the individual owners' level.
> Does this apply to ride share operators? I take the standard deduction but then I don't have that much income as I drive part time...


The 20% is in addition to the standard deduction. In addition the concensus is it applies to rideshare.


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## hrswartz (Jan 4, 2019)

Ok


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