New for tax year 2018 (TCJA) the QBID allows sole proprietors and individual owners of pass through entities such as S corps, Partnerships and LLC’s to deduct 20% of their qualified business income up to 20% of their ordinary taxable income.
This is a boon for small business owners, however the law is complex and there are several limits and restrictions such as:
- The deduction phases out for high income tax payers who derive their QBI from service fields such as health, law, accounting, financial services etc.
- The phase our starts at $315,000 for joint filers and $157,500 for others.
- Even those taxpayers who do not operate in personal service businesses are subject to restrictions based on W2 wages or W2 wages and investment in assets.
Due to the complexity of the rules and the fact that the IRS has promised clarification on several parts of the law, we advise that you consult a tax professional to guide you through the process.
Please call me at 704 491 5201 or email me at firstname.lastname@example.org for further guidance and consultation.