by Carolyn Rothwell on May 14, 2018

Tax Reform in TOTAL - Qualified Business Income Deduction

TOTAL, Money Tree's in-depth financial planning software, now includes the Qualified Business Income (QBI) deduction available to taxpayers engaged in a qualified trade or business.  The new provision introduced in the recent tax reform allows a deduction for up to 20% of QBI from sole proprietorships, limited liability companies (LLCs), S corporations, partnerships, real estate investments, trusts, and estates. 

At the most basic level, the deduction amounts to 20% of the taxpayer's qualified business income.  The full calculation surrounding deduction is anything but basic, which may reduce or eliminate the potential deduction. 

TOTAL's planning data offers a new item, Qualified Business Income Deduction, under the Tax Details tab of the Taxes section, to capture the amount of deduction available to clients.  TOTAL will not attempt to calculate the deduction due to the complex rules surrounding the deduction.  Instead, TOTAL will solely capture the deduction amount for tax purposes.  

TOTAL Tax Data Qualified Business Income Deduction

The amount of the deduction entered under Qualified Business Income reduces the client's taxable income directly.  A "Qualified Business Income Deduction" line will display on the Current Year Tax Report with the amount of the deduction directly below itemized deduction.   

Current Year Income Tax - QBI Deduction

Golden Years, TOTAL's cash-flow-based planning approach, completes a full tax analysis each year of the projection.  The qualified business income deduction amount is folded in with the itemized/standard deduction amount on the Taxable Income Analysis, reducing taxable income by the amount of the deduction.  

Taxable Income Analysis QBI Deduction

Like a majority of the tax reform changes, the Qualified Business Income Deduction is not permanent and scheduled to sunset after 2025, reverting to the law in effect before the TCJA.

TOTAL includes an option to assume the sunset provision takes place, or that the sunset does not happen and the rule changes under the TCJA continue beyond 2025. A handy cheat sheet highlights the major rule changes, provides the new tax rules compared rules in place prior to the TCJA, and indicates which provisions are scheduled to sunset.

Learn More about the Qualified Business Income Deduction - Helpful Resources:

Get the Latest Version Now: 

TOTAL Desktop Edition: 
Get the latest desktop edition to update to the 2018 tax rules with the new QBI deduction.  

TOTAL Online Edition:
The online edition is updated to the 2018 rule with the new QBI deduction.  Simply log in and start planning.  

Do you have a question for our support team?  

Send a support request and we'll contact you or call toll-free 877.421.9815 ext 0 for assistance. 

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Carolyn Rothwell

Carolyn enjoys spending her time building Money Tree Software's brand and products. Her experience creating and delivering financial plans for a full-service financial planning firm and supporting advisors working to provide the best planning to their clients as a Money Tree support member has provided an excellent understanding of the importance of financial planning.