If you are a high earner and not in the out-of-favor specified service trade or business group, as explained in Tax Reform Sticks It to Doctors, Lawyers, Athletes, Traders, and Others, you may want to consider operating as an S corporation to qualify for the Section 199A 20 percent tax deduction.
If you currently file as a Schedule C taxpayer because you receive 1099s, operate a single-member LLC, or do business as a proprietor, you can qualify for the 20 percent tax break allowed by Section 199A of the tax code if your business and taxable income are just right.
And this is no longer a break with an expiration date. Section 199A was scheduled to die on December 31, 2025. The One Big Beautiful Bill Act (OBBBA) repealed that sunset and made the 20 percent deduction a permanent part of the tax code. Beginning with your 2026 tax return, the OBBBA also (1) widens the phase-in range that governs the strategy in this article, and (2) adds a $400 minimum deduction.
But if your taxable income is too high and you don’t have a payroll or own depreciable property, this break collapses to that $400 minimum—when it could have been worth tens of thousands of dollars to you. Creating an S corporation may be your fix for this problem. ... Log in to view full article.
