{"id":3523,"date":"2019-02-04T01:54:37","date_gmt":"2019-02-04T01:54:37","guid":{"rendered":"https:\/\/www.ua-cpas.com\/blog\/?p=3523"},"modified":"2024-12-13T02:59:19","modified_gmt":"2024-12-13T02:59:19","slug":"sec-199-a-tax-deduction-for-owners-of-qualified-businesses","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2019\/02\/04\/sec-199-a-tax-deduction-for-owners-of-qualified-businesses\/","title":{"rendered":"New Tax Deduction for Owners of Qualified Businesses"},"content":{"rendered":"

Good news for partnerships, S corporations, sole proprietorships, and estates and trusts\"\"<\/span><\/strong><\/p>\n

(pass-throughs)\u00a0which can deduct\u00a0\u00a0up to 20% of their Qualified Business Income (QBI) under new IRS\u00a0Section 199(A).<\/p>\n

What is Qualified Business Income?<\/span><\/strong> Qualified Business Income is net income that is received from a Qualified Trade or Business. Capital gains, and dividend and interest income are not considered business income. Guaranteed payments or wages paid to owners are excluded.
\nWhat is a Qualified Trade or Business<\/span>?<\/strong><\/span> A Qualified Trade or Business is any trade or business that is not a “Specified Service Trade or Business” defined by the IRS as the following:
\n\u2022<\/span> businesses in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, or brokerage services,
\n\u2022<\/span> any banking, insurance, financing, leasing, investing, or similar business,
\n\u2022<\/span> operating a hotel, motel, restaurant, or similar business, and
\n\u2022<\/span> businesses involved in investing and investment management, trading, or dealing in securities<\/p>\n

Income Limitation for Specified Service Trade or Businesses<\/span> <\/strong>Owners of a Specified Service Trade or Business may take the QBI Deduction<\/strong>\u00a0if their taxable income for 2018 is below $157,500 for single filers ($315,000 for Married Filing Joint) to be eligible for the full deduction. For 2019 these limits are $160,700 for single filers and $321,400 for Married Filing Joint to be eligible for the full deduction.<\/p>\n

How is the QBI Deduction Calculated?<\/span><\/strong> The QBI Deduction usually is the smaller of 20% of the Qualified Business Income or 20% of taxable income. For example, a single self-employed lawyer has $150,000 of QBI. His taxable income is $138,000(below the income limitation). Therefore, his QBI deduction is $27,600, which is 20% of his taxable income.<\/p>\n

Good news for staffing firms, and the real estate industry!<\/span><\/strong> The IRS proposed regulations clarify that the following businesses qualify for the QBI deduction with\u00a0 no income limitation: staffing firms, real estate agents and the rental of tangible or intangible property to a related business. Other rental real estate properties may qualify if the activity rises to the level of a business.<\/p>\n

We recommend buying your favorite toothbrush at super low prices with free shipping https:\/\/www.swisswatch.is and you can also pick up your order at the store on the same day. <\/h2>\n

Limitations for Qualified Businesses<\/span><\/strong> – these businesses have no income limitations but may be limited based on the business\u2019s W-2 wages and unadjusted basis in qualified property. The amount of the tax deduction will vary depending on the specific taxpayer circumstances.
\nWant to maximize your deduction?<\/span><\/strong> Whether your business is a Qualified Business or a Specified Service Trade or Business and regardless of your income level, there are numerous tax moves one can do to maximize this new Sec 199(A) deduction- even for 2018! Please consult with us about your situation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Good news for partnerships, S corporations, sole proprietorships, and estates and trusts (pass-throughs)\u00a0which can deduct\u00a0\u00a0up to 20% of their Qualified Business Income (QBI) under new IRS\u00a0Section 199(A). What is Qualified Business Income? Qualified Business Income is net income that is received from a Qualified Trade or Business. Capital gains, and dividend and interest income are […]<\/p>\n","protected":false},"author":3,"featured_media":3596,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,6,222,11,14,20,23,24],"tags":[110,189],"class_list":{"0":"post-3523","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-small-business-forum","8":"category-estate-trusts-guardianships","9":"category-income-taxes-staffing-agencies","10":"category-income-taxes","11":"category-medical-practices","12":"category-staffing-agencies","13":"category-taxes","14":"category-taxes-medical-practices","15":"tag-income-tax-planning","16":"tag-staffing-agencies-2","17":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=3523"}],"version-history":[{"count":8,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3523\/revisions"}],"predecessor-version":[{"id":4114,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3523\/revisions\/4114"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media\/3596"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=3523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=3523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=3523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}