For clients who are self-employed, you can choose to add a Self-employment income card in place of (or in addition to) a Salary card. This card is commonly used to reflect 1099 income.
Self employment income can be entered into RightCapital within the Income section of the Profile (or the Income step of the initial data entry process), by clicking Add Income > Self-Employment:
Self-Employment Data Entry
Click on this card to open a data entry drawer on the right side of your screen, allowing you to input the details:
1
The Income name will default to [Client's] Self-employment income, but you can enter a custom name if you'd like. In joint plans, you will also want to choose either the client or the co-client as the Owner.
2
Enter the Annual amount of the client's self-employment income. This figure should be entered net of any deductible business expenses. Taxes will be applied automatically.
3
Specify the duration of the self-employment income using the Income starts and Income ends fields. By default, these will be set to 'Already started' and '[Client's] retirement' respectively.
4
Determine the Annual increase. The income stream will increase by this percentage each year.
5
If the client's business qualifies as a specified service trade or business (SSTB), check the Service Income box. This will ensure the income is subject to the phase-out of the QBI deduction under TCJA.
Additional Information
Self-Employment Taxation
Self-employment income will be treated as Schedule C income within client plans. If the 'Service Income' box is checked, this income will also be subject to the phase-out of the QBI deduction.
Although RightCapital does not include a schedule C, Self-employment income can be found on Line 3 of the Schedule 1, which will then feed into Line 8 of the 1040 as Other Income. Sample tax forms can be viewed in the Tax > Tax Estimate > Details tab:
Self-Employment Cash Flows Location
Self-Employment income can be tracked within the Retirement > Cash Flows > Summary page, by clicking into the Income Inflows column:
