Qualified Business Income Deduction
Tax Principal Emily Matthews wrote the below summary of the Deduction for Qualified Business Income, also known as Section 199A of the Tax Cuts & Jobs Act. Edelstein & Company has taken special interest in this section of the new code and expanded our education in this area so that we can discuss in depth with our clients.
Beginning in 2018, individuals with business income may be eligible for a deduction of up to 20% of their Qualified Business Income. There is a common misconception that this deduction is not available to consultants, however it still may apply, if an individual meets the requirements. This is mainly dependent on taxable income limitations.
The impact for some will be that they are:
- likely eligible for the full deduction where taxable income is less than $315,000 (married filing joint),
- subject to a reduced deduction where taxable income is between $315,000 and $415,000 (married filing joint), and
- unable to benefit from the new deduction where taxable income exceeds $415,000 (married filing joint).
Taxable income may be reduced by various deductions to fall below these limits, including funding retirement or contributing to charity. Effective tax planning can really come into play here, which is where we step in.
If you have specific questions about the Qualified Business Income Deduction, please connect with your Edelstein advisor today.
Join Our eNews List