If you operate a pass-though business such as a proprietorship, partnership, or S corporation, new tax code Section 199A offers you a possible 20 percent tax deduction gift on your business income. The gift applies only for tax years 2018 through 2025.
For sure, you obtain this business income gift if your 2018 taxable income is equal to or less than $315,000 (married, filing jointly) or $157,000 (filing as single or head of household).
When you are under the thresholds above, you find your deduction by applying the 20 percent to the lesser of your
defined qualified business income (QBI), or
taxable income less defined capital gains (IRS Clarifies Net Capital Gains in Final 199A Regulations).
Example. If you have defined QBI of $100,000 and taxable income of $120,000 with no capital gains, your Section 199A gift is a deduction of $20,000 (20 percent of $100,000).
If you can qualify, you have to love this tax-deduction gift. After all, what’s not to love? So, let’s get started and see what makes up your QBI. ... Log in to view full article.