By month: September 2018
You have three good reasons to get your qualified small-business health reimbursement account (QSEHRA) in place on or before October 2. First, this avoids penalties. Second, your employees will have the time they need to select health insurance. Third, you will have your plan in place on January 1.
Section 199A gives you up to a 20 percent tax deduction for your pass-through business income. Do your rental activities count? We’ll go over what the proposed Section 199A regulations say about your rental activities and whether those activities qualify you as an individual for this possible 20 percent tax deduction.
If you have high income and operate an out-of-favor specified service business, you may think your Section 199A deduction is gone for good. But there is hope: we’ll explain how a conservation easement may be the solution to your problem. And if the numbers work out, you could get a large tax windfall in the process.
Here’s a link to a resource that gives you 10 proven strategies to lower S corporation taxes.
Section 199A provides a valuable 20 percent tax deduction but denies it to certain “out-of-favor specified service businesses” when individuals have taxable income greater than $207,500 (single) or $415,000 (married). New IRS regulations are a welcome sight because they give more clarity and add leniency as to which businesses are out of favor (and which are not).
Calculating your Section 199A deduction with one business is complicated. When you have multiple businesses, including businesses with losses, it gets even worse. We’ll clearly explain the rules related to multiple businesses along with how the new proposed regulations may allow you to aggregate certain businesses.
Here’s a resource guide that gives you the Tax Cuts and Jobs Act tax reform articles published at the Bradford Tax Institute from January 1 through July 31, 2018, including for each article the (a) topic, (b) code section, (c) prior law, (d) new law, and (e) link.
As you likely already know, your Section 199A deduction depends on where you fall in the qualification process. For example, one qualification process is income below the thresholds that qualify you for the Section 199A deduction on your pass-through income regardless of business type. Another process is income in the phase-in range that qualifies you for a phase-in deduction. Here we explain what that income is and how it impacts your new tax reform Section 199A deduction.
In early August, the IRS released its proposed regulations on new tax code Section 199A—the tax code section that created the 20 percent tax deduction that applies to S corporations and other pass-through entities. The good news in the new IRS regulations for S corporation owners is increased clarity on how to treat reasonable compensation for the Section 199A tax deduction.