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The new section 199A deduction can provide additional business tax savings



The Tax Cut and Jobs Act 2017, Provision 11011, Section 199A, provides a 20% tax deduction through the pass business. Eligible taxpayers include sole proprietorships, S corporations, partnerships, publicly traded partnerships (PTPs), and real estate investment trusts (REITs). Although calculating deductions can be a difficult challenge, many taxpayers can join their lower ranks.

Section 199A, also known as the deduction for eligible business income, has two main components:



  1. Eligible taxpayers may be entitled to up to 20% deductible business income (QBI) from a home-based business operating as a sole proprietorship or through a partnership, corporation, trust or estate. For taxpayers with taxable income who exceed 5 315,000 for a married couple who have filed a joint return, or 7 157,500 for all other taxpayers, the tax or business type on these deductions, tax Taxpayers’ taxable income is limited to the amount of W-2. Wages paid by a qualified trade or business and immediately after the acquisition of a particular property held by the trade or business (UBIA). After payment of volatile basis. Income from C Corporation or from the provision of services is not eligible for deduction as an employee (www.irs.gov).

  2. Eligible taxpayers may also be entitled to a deduction of up to 20% of their Common Qualified Real Estate Investment Trust (REIT) profits and publicly traded partnership (PTP) income. This component of the Section 199A deduction is not limited to W-2 wages or property eligible by UBIA ( www.irs.gov ).

At this point, you may be wondering how S Corporation, Partnership, PTP or REIT, will qualify as a taxpayer when these business structures are considered “stand alone” entities. Well, the answer to that question is that all of the above mentioned business structures report the Qualified Business Income (QBI) of each partner or shareholders, the undeclared base of W-2 wages, the acquisition of qualified property. Immediately after (UBIA), qualified REIT profit, and PTP eligible income on Schedule One 1. The deduction is then applied to applicable taxpayers.

An authoritative trade or business defined by the IRS, any trade or business other than a specific service trade or business other than accounting, health, law, actuarial science, performing arts, consulting, athletics, financial services, investment , Investment includes the performance of services. Management, trade, or any trade or business where the main asset is the reputation or skills (languages) of one or more of its employees. This exception only applies if the taxpayer’s taxable income is more than 31 315,000 for a married couple filing a joint return, or 15 7,157,000.00 for all others. This exception also applies to taxpayers who serve as employees ( www.irs.gov ).