With the major overhaul of the tax code in December 2017 that included the passage of the Tax Cuts and Jobs Act, and subsequent proposed and final regulations issued, taxpayers run the risk of missing valuable deductions available to them either due to complexity of the law or confusion over the interpretation thereof. One such example of a valuable tax break is the Qualified Business Income Deduction (QBID).
Section 199A of the US Tax Code, which covers the QBID, generally provides a deduction of up to 20% on income from a qualified trade or business for entities that are operated as S corporations, partnerships, or sole proprietorships. One point worth mentioning is that this deduction does not require a cash outlay from the business or individual.
Due to the complexities surrounding this aspect of the law, it is advised that you consult with a CPA to determine whether or not your business activity qualifies for this deduction.
While the regular filing season has passed, if your business activity has already been reported to the IRS, we encourage you to review your tax return to ensure that, if eligible, you took advantage of this valuable tax break. If your return is on extension, be sure to ask your CPA about this deduction so that you can maximize all available tax advantages.
Please contact one of our offices to learn more about the QBID and how it can be applied to your specific situation.