![]() The federal Qualified Business Income Deduction (QBID) has no impact on the Ohio income tax return or form IT BUS. A pass-through entity includes partnerships, S corporations and LLCs (limited liability companies). Only business income earned by a sole proprietorship or a pass-through entity generally qualifies for the deduction. Any remaining business income above these thresholds is then taxed at a flat 3% rate. This is commonly referred to as Ohio’s Business Income Deduction (form IT BUS). For taxpayers who file “Married filing separately,” the first $125,000 of business income included in federal adjusted gross income is 100% deductible. The first $250,000 of business income earned by taxpayers filing “Single” or “Married filing jointly,” and included in federal adjusted gross income, is 100% deductible. Ohio taxes income from business sources and nonbusiness sources differently on its individual income tax return (the Ohio IT 1040).
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