Pass Through 20% Deduction for 2018

The new 20% deduction for qualified business income is simple for those taxpayers with taxable income (line 43 on the 2017 form 1040) less than $315,000 filing joint or  $157,500 filing single. They get to deduct the lesser of 20% of qualified business income or 20% of taxable income minus net capital gains. Qualified business income is income from a US trade or business which can be a sole proprietorship, partnership, S corp, LLC, trust. or estate. Qualified business income is not W-2 wages, interest, capital gains or most dividends.