Comment by idlewords
3 years ago
The answer is you spend part of the 10% profit on a CPA or tax lawyer. The legal deductions, they are so many. I've run a bootstrapped software business for 14 years and I never even heard of this one until your post.
see https://news.ycombinator.com/item?id=34628269, this caught everybody by surprised because they assumed Congress would fix their mistake before tax season but it's new this year and it's seemingly pretty devastating. see some replies from actual CPAs in the thread.
Is there a list of these deductions somewhere for those who can’t afford a cpa or tax lawyer
The IRS documentation is pretty clear, and there's a lot of free material online that goes into detail. I'd recommend just starting with the IRS docs for 1040 Schedule C.
How do you deduct payroll / dev costs?
Me personally? The same way any small business does; I forget the exact line number but the upshot is you tell the IRS who you paid and subtract that amount from gross revenue.
I think what OP is saying is that all software development costs must be amortized now. Most small businesses are not developing their own software and would not be impacted.
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> you tell the IRS who you paid
unless they are overseas and have no US tax liabilities.