1701Q with zero tax due? Is this correct?

Details on how the computation changed with TRAIN

EJ Arboleda avatar
Written by EJ Arboleda
Updated over a week ago

The computation for income tax will depend on a couple of settings that can be seen in your SETTINGS page.

(1) Which option you selected in the Income Tax Rate Type
(2) Which option you selected in the Income Source

If you chose "Graduated Income Tax" in the Income Tax Rate Type:
If your taxable income (gross sales - deductions) is less than 250K, then your tax dues will map to zero. Please see the updated income tax table as per TRAIN here:

If your client withheld any taxes from your income (via Form 2307s), they will be deducted from zero -- resulting in a negative payable.

If you chose "8% Gross Receipts Tax" in the Income Tax Rate Type:
The 8% Gross Receipts Tax is computed differently depending on whether your income comes solely from your business or if your income comes from both business and compensation.

If your income comes solely from your business or profession (meaning you DID NOT choose "Mixed from business and employment" in the Income Source field), then use this formula:

Total Income Tax Due = 0.08 * (Gross Sales - 250,000)

If your income comes from BOTH compensation and business (meaning you chose "Mixed from business and employment" in the Income Source field), then use this formula:

Total Income Tax Due = (0.08 * Gross Sales) + Tax Due on Compensation

Note: If you have mixed income, your Quarterly due would not include your tax due on compensation. Your compensation tax due would only be added when you file your annual income tax.
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