Great New Deduction

Tax reform’s greatest gift is the reduction in the C corporation’s top tax rate from 35 percent to 21 percent.

Perhaps tax reform’s second-greatest gift is the Section 199A tax deduction. If you operate your business as a sole proprietorship, partnership, or S corporation, the Section 199A tax deduction offers you the potential for good-sized tax savings that require knowledge only.

Problem

The basics of the new Section 199A tax deduction are that you can deduct up to 20 percent of your qualified business income. It’s that simple, right?

NO! Are you kidding? You are looking at 21st-century tax law, and this is a big, new law—not simple, for sure.

Here are just a few considerations for the deduction:

Do you have pass-through business income?

Is your business an in-favor or an out-of-favor specified service trade or business?

If your business has both in-favor and out-of-favor parts, can you divide the business to achieve the Section 199A deduction?

Why do you have no worries about any pass-through business if your taxable income is equal to or less than $157,500 (filing as single or as head of household) or $315,000 (married, filing jointly)?

We could go on and on. There’s much you need to know.

Solution

To help you navigate the Section 199A knowledge you need, we created a brand-new Section 199A deduction topic guide. Think of this guide as your compass for navigating the 199A waters.

The topic guide points you to the articles that answer the crucial questions—do you benefit from this new deduction, when do you benefit, and how do you make this deduction work for you?

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