whee. taxes.

[arethinn]

Besides half upending my mental picture of what forms I need to file enotsola's and my taxes (spoilers: if you have self-employment income it isn't really any simpler, and some schedules are still called the same thing while some aren't), this year's tax quandary is whether we can take the "Qualified Business Income" deduction. We seem to meet the requirements as to our total income and the nature of the business, but the forms all expect you to fill in an EIN (Employer Identification Number) for the business. It doesn't have one; it's a sole proprietorship with no employees and no legal entity of its own (LLC, S corporation). Trying to take this deduction if we're not actually eligible would not be a small error (something on the order of $1600-1700 difference in taxable income). Does anyone know anything about this one? I fear I may wind up having to actually call the IRS, which I would dread in any case but even more so this year due to the recent unpleasantness.

eta: I may have created a problem where there wasn't one. I am at work without my draft filled forms and am quickly glancing at fresh blanks, so I need to review this more carefully again when I get home. See my reply to elf.

Comments

[elf]

As far as I know, a SSN can be substituted for the EIN if there are no employees.

If not, getting an EIN is free and a low-hassle process; you are not required to have or intend to have employees to get one.

[arethinn]

I must not have read the instructions for this line very carefully the first time, because now I see where in the instructions for the related worksheet it says, "If you don’t have an EIN, enter your social security number or individual taxpayer identification number." That's a worksheet, though, which is not submitted to the IRS, so it's not like it matters much anyway. I could have sworn there was a spot on an actual submitted form where it asked for an EIN and did not instruct what to do if you did not have one, but right now I'm not finding it on either 1040 itself, nor Schedules 1 or 4 (which are new to me), nor Schedules C-EZ or SE (which don't appear to have changed from before).

FWIW, that worksheet differs from the instructions for Schedule C-EZ, Profit or Loss from Business (Sole Proprietorship), which explicitly says to leave the EIN blank if you don't have one, not to enter your SSN instead (it has a separate space for the proprietor's SSN).

[teaotter]

Regardless of what the forms say, a sole proprietorship can qualify for the deduction, with or without an EIN.

(I say this as a CPA; although I'm not a paid tax preparer, I am up-to-date on this section of the new tax law because it pertains to me.)

This year's forms weren't ready before the shutdown and were rushed out for the start of tax season. They're terrible.

[arethinn]

(old comment is old)

Yanno something that darkly amuses me, is that they crowed about "the 1040 is the front and back of a postcard!" and then... didn't... set the PDF up that way. Like, it's just the top half of each of two 8.5x11 pages. Not actually custom page sizes.