Qualified Business rules are not properly applying in Turbo Tax 2018 edition!
First, what is the QBI deduction? Here’s a quick read about what it is and what it means for your business. https://lizzybeestax.com/what-is-qbi-deduction/
Now that you understand the basics here’s what’s going on:
Every year we test Turbo Tax and similar programs for compatibility, user friendliness and accuracy. We do this by preparing the return with our office’s software and then again through their’s.
As we went through all of the dependents, income, deductions, etc… it seemed easy enough to use. There were a few things that I wasn’t sure what they meant exactly (and I’m a tax professional) but still, fairly simple.
Then we get to their wrap up where it shows you what they saved you on. The first thing I saw was the Child Tax Credit. Our 8 kids gave us $16,000 this year. Excellent! Then we get to the QBI deduction.
If you remember from the Q&A link above my industry, accounting, does not qualify for the QBI deduction under the Qualified Business rule. (If you’re lost now would be a great time to read the article. It’ll take maybe 5 minutes).
While an extra $16,000 off of my tax bill sounds great, if I was ever audited this would mean not only would I have to repay the credit I wasn’t supposed to receive, but I would ALSO have to pay penalties and interest!!!
This is a HUGE deal!
I usually don’t dissuade people from using easy to use services. But for this year while everyone is working out the kinks of the TCJA and learning the new ropes, I would suggest using a professional.